Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 1, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Finance Act provisions enforced; tax & duty changes effective Nov 1, 2024.
This notification brings into force various provisions of the Finance (No. 2) Act, 2024. On the date of publication, sections 118, 142, 148, and 150 come into effect. Sections 114 to 117, 119 to 141, 143 to 147, 149, and 151 to 157 come into force on November 1, 2024. The notification is issued by the Central Board of Indirect Taxes and Customs under the Ministry of Finance, exercising powers conferred by the Finance Act.
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GST Dept's Show Cause Notice for Input Tax Credit Recovery Quashed for Lack of Jurisdiction and Proof of Fraud.
Show Cause Notice u/s 74 of CGST Act lacks jurisdiction as it fails to establish fraud, willful misstatement or suppression of facts by petitioner in availing Input Tax Credit. Proceedings dropped earlier u/s 73 cannot be reopened u/s 74 without fulfilling prerequisites. High Court maintains consistent view that writ petition against jurisdictionally deficient Show Cause Notice is maintainable. Impugned Show Cause Notice quashed for want of basic ingredients required to initiate action u/s 74, rendering entire exercise without jurisdiction.
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Flawed order for lack of personal hearing & undue delay.
Petition maintainable - violation of Section 75(4) of UPGST Act - denial of opportunity of personal hearing - violation of principles of natural justice. Opportunity of personal hearing must be provided before assessment/adjudication order against assessee. Neither adjudicating authority issued notice for personal hearing nor granted opportunity to petitioner. Before adverse order in adjudication, personal hearing must be offered to noticee. If waived, authority may proceed ex-parte. Inordinate delay of five years in passing impugned order violates natural justice. Impugned order passed in gross violation of natural justice - unsustainable, petition allowed.
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Tax demand paid, but right to appeal remains - High Court clarifies Section 129(5).
The High Court held that Section 129(5) of the State Act, which stipulates that upon payment of the entire amount pursuant to a notice u/s 129(3), all proceedings related to that notice shall be deemed concluded, applies only when the entire amount stated in the show cause notice is paid. However, it does not preclude the right to file an appeal against the order passed u/s 129(3) within the stipulated time. The Court opined that the petitioners' right to file appeals against the orders dated 19.10.2023 and 12.09.2023 cannot be taken away merely because they paid the demanded amount. The Court held that due to the respondent authorities' fault, the petitioners were unable to file appeals against those orders, and the petition was disposed of accordingly.
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Procedural lapses in GST registration cancellation case. Opportunity of hearing & reasons denied. Appeals dismissed on limitation.
Order of cancellation of registration passed without providing opportunity of hearing or assigning reasons, appeals dismissed on limitation ground. Coordinate Bench held procedural aspects should be scrutinized diligently, unnecessary to give chance for complaint. Appellate Authority dismissed appeals, revisional power u/s 108 cannot be exercised. Impugned orders quashed, matter remanded to Assessing Officer at show-cause notice stage. Registration to remain suspended till disposal of show-cause notice. Petition partly allowed by way of remand.
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Faulty ITC Refund Order: GSTR Mismatch Ignored, Reconciliation Overlooked.
Remand order issued in case concerning refund of accumulated input tax credit (ITC) for zero-rated supply due to mismatch in ITC as per GSTR-2B and GSTR-3B. Adjudicating authority faulted for not examining reconciliation statement and passing refund order without sufficient discussion. Appellate authority also failed to address reconciliation issue as required u/s 107(11) of CGST Act. Matter remanded to appellate authority for fresh consideration by setting aside impugned order.
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Petitioners allowed to file GST appeal sans pre-deposit of tax amount if frozen account balance sufficient.
The court held that the parameters for entertaining the writ petition were not satisfied, and the petitioners had an adequate, alternative, and efficacious remedy available u/s 107 of the Assam GST Act, 2017. The court was not inclined to entertain the writ petition challenging the impugned order dated 12.08.2024, as an alternative remedy was available. However, the petitioners were at liberty to file an appeal u/s 107 of the AGST Act, 2017. Regarding the pre-deposit of 10% of the tax amount required u/s 107(6)(b) for filing an appeal, the court directed the Appellate Authority to permit the filing and entertaining of the appeal(s) without any pre-deposit, subject to the frozen accounts mentioned in the Show Cause Notice dated 09.04.2024 having deposits equivalent or more than the required amount. The petition was disposed of accordingly.
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Business can't face double jeopardy - GST authorities can't demand ITC reversal if DGGI already initiated proceedings on same issue.
The court held that the respondent authority cannot adjudicate a demand for reversal of input tax credit (ITC) on non-business transactions and exempt supplies, when the same issue is already subject to separate proceedings initiated by the Director General of GST Intelligence (DGGI). As the period covered under the impugned order overlaps with the show cause notice issued by the DGGI, both proceedings cannot continue simultaneously. Consequently, the impugned demand for reversal of ITC was set aside, and the petition was allowed.
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Refund applications under GST Act to be processed within a month, else provide reasons & opportunity of hearing.
The High Court directed the respondents to process the petitioner's refund applications filed u/s 54 of the Central/Delhi Goods and Services Tax Act within one month. If the respondents intend to reject the applications, they must provide reasons and afford the petitioner an opportunity to be heard before passing an order. The petition was disposed of based on the respondents' statement to comply with the court's directions.
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GST Appellate Tribunal for Kerala must be set up within 4 months, as per High Court directive on Section 112 of CGST Act.
The High Court directed respondents to expeditiously establish the GST Appellate Tribunal in Kerala as per Section 112 of the CGST Act 2017. While noting steps were underway, it ordered completion of the entire selection process within four months. The Court declined to rectify Section 169 by replacing "or" with "and" to mandate service through minimum three modes, stating individual grievances must be raised through separate litigation. The writ petition was disposed of.
Income Tax
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Due date extended for filing IT audit reports to Oct 7 for AY 2024-25.
The circular extends the due date for filing various audit reports under the Income Tax Act for the previous year 2023-24 (assessment year 2024-25) from September 30, 2024 to October 7, 2024 for assessees referred to in clause (a) of Explanation 2 to sub-section (1) of section 139. This extension is granted by the Central Board of Direct Taxes (CBDT) in exercise of its powers u/s 119 of the Income Tax Act, considering the difficulties faced by taxpayers and stakeholders in electronic filing of audit reports.
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Tax reassessment validity questioned for dissolved/amalgamated companies.
Validity of reassessment proceedings against non-existent entities or amalgamating companies. The key points are: 1) Initiating or continuing proceedings against a dissolved company or one that no longer exists in law would invalidate the proceedings. 2) Once a Scheme of Arrangement is approved, the transferor companies are dissolved by operation of law, and proceedings drawn in their name would be a nullity. 3) Sections 159 and 170 of the Act are not applicable in such cases. 4) Invoking Section 154 for rectification to overcome a jurisdictional error is not permissible. 5) Issuing notices u/s 142(1) bearing the PAN of the erstwhile entity, though a mistake, is not a fundamental flaw or incurable illegality. 6) Failure to apprise the authorities about the approved Scheme of Arrangement renders the proceedings valid. 7) The High Court dismissed petitions where disclosures about the Scheme were not made during assessment proceedings.
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Income Tax notices quashed due to procedural lapses & lack of competence.
The court held that the notices issued u/s 133(6) and the subsequent notice u/s 148 of the Income Tax Act were invalid. The petitioner had filed a reply to the notice u/s 133(6), but it was erroneously stated that no reply was received. The court found that the amount in question was already included in the petitioner's income tax return and duly processed by the Assessing Officer. The court concluded that the notice u/s 148 was issued without proper application of mind and was vitiated. Additionally, the court held that the officer who issued the notices lacked competence, as per the judgment in Jasjit Singh case, which ruled that notices issued by the Joint Assessing Officer u/s 148 without conducting faceless assessment u/s 144B were contrary to the provisions of the Act. Consequently, the court quashed the impugned notices issued u/ss 133(6) and 148.
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Tax settlement application: Interest liability capped till admission date.
The High Court held that the Income Tax Settlement Commission (ITSC) rightly restricted the applicability of interest u/s 234B on the total income disclosed in the Statement of Facts (SOF) up to the date of admission of the application u/s 245D(1). For considering the application, the ITSC must be satisfied that the applicant made a full and true disclosure regarding income and the settlement amount. After admission, the ITSC can call for reports, records, and undertake further inquiry under sub-sections (3) and (4), wherein the final amount payable could hypothetically be more than disclosed in the SOF. Following the Supreme Court's decision in Brij Lal, the interest liability u/s 234B cannot extend beyond the date of admission u/s 245D(1). Therefore, the ITSC correctly limited the interest liability to the date of admission, and the High Court dismissed the writ petition challenging this.
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No penalty for non-compliance with transfer pricing rules if information provided satisfies TPO.
The case pertains to the levy of penalty u/s 271G for failure to furnish documents and information u/ss 92CA/92D. The key points are: The Transfer Pricing Officer (TPO) and Assessing Officer (AO) did not find the information/explanations provided by the assessee during transfer pricing assessment proceedings to be inaccurate or insufficient to determine the arm's length price. The TPO acknowledged that the assessee furnished the required details and information. There was no finding recorded by the TPO that the assessee lacked bona fides or displayed indifference in producing records, preventing the TPO from determining the arm's length price. Significantly, the Transfer Pricing adjustment made by the TPO was deleted by the Dispute Resolution Panel (DRP), and the Revenue accepted the DRP's order. Relying on the case of Ankit Gems (P) Ltd., the Appellate Tribunal held that where the TPO accepted the assessee's benchmarking under TNMM and made no variation/adjustment to the arm's length price, the imposition of penalty u/s 271G would be unsustainable. Consequently, the assessee's appeals were allowed.
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Penalty for concealment/inaccurate income disclosure quashed due to lack of clarity in notice, bonafide explanation.
The assessee challenged the penalty imposed u/s 271(1)(c) for short credit of sale consideration received from the sale of copyrights and cable rights. The issue centered around whether the penalty was levied for concealment of income or furnishing inaccurate particulars of income. The notice issued u/s 274 read with Section 271(1)(c) did not specify the nature of the default. Judicial precedents have held that when the charge is not clearly specified in the penalty notice, the penalty proceedings are rendered invalid. The Hon'ble Supreme Court and Karnataka High Court have ruled that vague notices u/s 274 render the penalty proceedings void ab initio. In the present case, the Assessing Officer failed to specify the exact charge, which is a procedural lapse. Even on merits, the addition sustained by the CIT(Appeals) related to a disputed adjustment of sale consideration, with no finding that the assessee deliberately concealed income or furnished inaccurate particulars. The assessee's explanation appeared bonafide, and there was no evidence of malafide intention. Consequently, the imposition of penalty could not be sustained, and the assessee's appeal was allowed.
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Tribunal examines TDS on secondees, tech fees to parent co; remits matters for fresh adjudication.
The ITAT examined two issues: (1) Tax deduction at source (TDS) u/s 195 on payments to seconded employees, and (2) disallowance of technology fees paid to the parent company. Regarding TDS, the ITAT found clauses indicating the seconded employees had a lien on their jobs with the parent company, and the assessee provided tools/equipment and indemnified the parent company. These aspects required fresh examination by the Assessing Officer (AO) to determine the true nature of payments. On technology fees disallowance, the ITAT held that the AO/TPO cannot disallow genuine expenses merely because no benefits accrued. However, the assessee failed to substantiate services rendered by the parent company through cogent evidence. The ITAT remitted this issue to the AO/TPO for fresh adjudication after considering all evidence filed. The assessee's appeal was allowed for statistical purposes.
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Software license fees not taxable as FIS under DTAA; no technical know-how 'made available'.
The key points in the legal document are: Software licensing amounts do not qualify as Fees for Included Services under Article 12(4)(b) of the India-US DTAA, as the 'make available' clause is not satisfied. The non-resident has not made available the technical skill, expertise, or technical know-how used in preparing the commercial information to the assessee. Installation and integration services related to software are merely support services and cannot be taxed as Fees for Included Services when the primary services are not taxable. The assessee's appeal is allowed, following relevant precedents.
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Tax authorities' jurisdiction and lack of show-cause notice questioned in income addition case.
Jurisdictional issue regarding notice u/s 143(2) was addressed, with ITAT holding that the initial notice by ACIT, Circle-5(1), Delhi was within time, and subsequent transfer to jurisdictional AO did not invalidate proceedings. Regarding addition u/ss 68/69C, ITAT held CIT(A) erred in making addition u/s 69C without issuing show cause notice as mandated u/s 251. Books of account were accepted by AO, who did not reject them or make efforts to verify sundry creditors. Additions u/s 68 cannot be made when sales, purchases, and gross profit were disclosed and accepted. CIT(A)'s addition u/s 69C on grounds of non-banking channel purchases was incorrect when sales were accepted and gross profit rate increased. ITAT deleted CIT(A)'s addition u/s 69C, allowing assessee's appeal.
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Long-term capital gains deduction on new house upheld; properties held as stock-in-trade not 'residential houses'.
The assessee claimed exemption/deduction u/s 54F on account of investing long-term capital gains in a new residential house. The PCIT disallowed the claim, considering the assessee owned more than one residential house on the date of sale of the original asset. However, the ITAT held that incomes from residential houses held as stock-in-trade were not liable to tax under 'Income from House Property' and did not qualify as 'residential house' u/s 54F. The PCIT provided no reasoning for considering the stock-in-trade property as a residential house. Regarding agricultural land, the PCIT's finding of small houses qualifying as residential houses based on electricity supply and local tax assessment lacked legal basis. The ITAT set aside the PCIT's order denying Section 54F deduction and directing assessment under 'Income from House Property'. The PCIT's direction to deny Chapter VI-A deductions was also set aside as the assessee had not claimed any such deductions. The ITAT held the PCIT's order unsustainable due to lack of concrete findings of error in the AO's order.
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Belated income tax notice quashed due to 4-year time limit violation.
Reasonable time limit for issuing notice u/s 201(1)/201(1A) is 4 years, as held in GE India Technology Centre and Mahindra & Mahindra Ltd. judgments. Where notice is issued beyond 4 years, it is barred by limitation u/s 201(1). In the present case, orders are beyond 4 years from the end of the financial year, hence unsustainable and quashed. The entire proceeding arose from a belated and unsustainable survey u/s 133A(2A) conducted on 09/12/2019, which is quashed. Non-resident income is clearly time-barred, while resident income transaction did not crystallize. Assessee's appeal allowed.
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Tribunal rejects second rectification plea on same grounds as first rejected plea.
Assessee filed second rectification application u/s 254, raising same grounds as first miscellaneous application which was already rejected. Tribunal held that except for certain documents, no evidence was available regarding payment of ESI and EPF within due dates as claimed. Second miscellaneous application filed within six months but on same grounds as first, hence not maintainable as per Smt. Vasantben H. Sheth case. Tribunal reiterated that Assessing Officer shall pass consequential order in compliance with Tribunal's order in Manikandan Vazhukkapara Kumaran case. Tribunal cannot entertain second miscellaneous application on same grounds after rejecting first.
Customs
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Govt extends validity of CAVR Order for Linear Alkyl Benzene imports for 1 more year from Sep 26, 2024.
This order extends the validity of CAVR Order No. 01/2023-Customs under the Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023, in respect of Linear Alkyl Benzene falling under HS Code 38170011. The extension is for a period of 1 year, effective from 26th September 2024 until 25th September 2025. The order is issued by the Central Board of Indirect Taxes and Customs, Ministry of Finance, Government of India, exercising powers conferred by the Customs Act, 1962 and the relevant rules.
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Rice export duty hike: 10% on paddy, brown & parboiled rice; exempts milled rice except Basmati.
This notification amends the export duty rates on certain varieties of rice under the Customs Act, 1962. It introduces a 10% export duty on rice in husk (paddy or rough), husked (brown) rice, and parboiled rice. However, it exempts semi-milled or wholly-milled rice (other than parboiled and Basmati rice) from export duty. The changes are effective immediately.
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Solar panel frames imports from China hit with anti-dumping duty of $403-$577/MT.
This notification imposes anti-dumping duty on imports of "Anodized Aluminium Frames for Solar Panels/Modules" originating in or exported from China PR. The designated authority concluded that the subject goods were exported to India at dumped prices, causing material retardation to the establishment of the domestic industry. Consequently, an anti-dumping duty ranging from $403 to $577 per MT is imposed on imports from specified Chinese producers/exporters and any other non-specified entities. The duty is applicable for five years from the notification date and payable in Indian currency based on the exchange rate specified by the Ministry of Finance.
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India Imposes Definitive Anti-Dumping Duty on Rubber Imports from China, Russia, Saudi, Singapore, and US to Protect Domestic Industry.
This notification seeks to impose a definitive anti-dumping duty on imports of "Isobutylene-Isoprene Rubber ('IIR')" originating from or exported from China, Russia, Saudi Arabia, Singapore, and the United States of America into India for five years. The duty rates vary based on the country of origin, country of export, and producer, ranging from $325 to $1,152 per metric ton. The duty aims to remove injury caused to the domestic industry due to dumped imports. The notification outlines the specific duty rates applicable to different scenarios involving the countries and producers mentioned. It also clarifies the currency conversion mechanism and the relevant date for determining the exchange rate.
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Customs officer lacked valid reasons to seize dried areca nuts based on mere opinion of their foreign origin.
Interpretation of the phrase "reason to believe" u/s 110 of the Customs Act, which is a crucial safeguard for authorizing officers to conduct searches. The court examined the legal principles governing "reason to believe," emphasizing that it cannot be arbitrary, capricious, or whimsical, and must be based on material evidence. The officer must independently apply their mind and not merely reproduce statutory words mechanically. The reasons must be self-explanatory and cannot be supported by extraneous material. In the present case, the suspected opinion of local traders that the seized dried areca nuts were of foreign origin was deemed unreliable and unacceptable, as their origin could not be conclusively determined by mere visual inspection. The court held that the seizure memo lacked valid reasons and set it aside, discharging the bank guarantee and ordering the release of the seized goods within three months.
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Tribunal quashes custom duty demand due to lack of evidence for clandestine clearance of goods.
The appellant challenged the demand of customs duty and penalties imposed on the grounds of alleged clandestine clearance of short found goods from their factory premises. The Tribunal held that the Revenue failed to provide corroborative evidence or conduct proper investigation from the transporter and buyer to establish the clandestine removal. Relying solely on the statement of the appellant's director without cross-examination is not sustainable. The burden of proof lies on the Revenue to establish their case beyond doubt with sufficient evidence. As the Revenue failed to discharge this burden effectively, the demand was set aside, and the appeal was allowed.
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Customs Broker's license revocation overturned due to disproportionate punishment, time-bar violation.
The CESTAT held that the order of suspension of the appellant's Customs Broker license was passed after the expiry of the prescribed limitation period, violating Regulation 20(2) of CBLR 2013. However, the legality of the suspension order could not be decided as the challenged order was the revocation dated 12.02.2015. The gravity of the alleged offense did not warrant revocation, which is disproportionate punishment. The appellant must have suffered enough financially, acting as a deterrent. Permanent revocation would adversely impact the appellant's family and employees. The appeal was partly allowed, ordering re-issuance of the Customs Broker License subject to procedural requirements, while upholding the forfeiture of the security deposit.
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Customs Warehouse Exonerated from Interest and Penalties on Duty for Fire-Related Goods Loss.
The appellants, a customs warehousing station, faced a fire incident resulting in the loss of certain goods. The customs duty amount on the lost goods was paid by the appellants. However, the proceedings aimed to recover interest and penalty on the duty amount under the Warehousing (Custody and Handling of Goods) Regulation 2016. The key points are: destruction/loss due to fire cannot be treated as removal u/ss 71 and 73A of the Customs Act, 1962, as there was no illicit physical removal. Regulation 4(c) of the Customs Warehousing Regulation, 2016, requiring an undertaking from the warehouse keeper, is not applicable as the Commissioner of Customs did not incur any liability. Section 73A applies only when goods are physically removed improperly, not in cases of loss due to fire or natural causes. Hence, the provisions of Section 73A and Regulation 4 cannot be invoked to recover duty, interest, or impose penalties in cases of loss due to fire within a bonded warehouse. The impugned order demanding interest and penalty was set aside by the Appellate Tribunal.
DGFT
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India lifts ban on Non-Basmati White rice exports, sets minimum $490/tonne price.
The notification amends the export policy for Non-Basmati White rice under HS code 1006 30 90 from 'prohibited' to 'free', subject to a Minimum Export Price of USD 490 per tonne. The change comes into immediate effect as per the Foreign Trade (Development & Regulation) Act, 1992 and the Foreign Trade Policy. The revised policy allows the export of Non-Basmati White rice, provided the export price meets the specified minimum threshold of USD 490 per tonne.
Corporate Law
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Land Sale Dispute Dismissed: Company's Urgent Need for Funds Justified Lower Price.
The crux of the matter revolves around allegations of oppression, mismanagement, illegal sale of company land, allotment of equity shares, appointment and removal of directors, and the legality of extraordinary general meetings and resolutions. The key findings are: the sale of land parcels at a lower price, though below market value, does not constitute oppression or mismanagement as the company urgently required funds, and the petitioner had consented to the sale price. The lease deed with Padmavatahi Ispat, though signed, was never executed and subsequently cancelled, hence not amounting to oppression. The allotment of 17,29,000 equity shares to respondents is held to be legal and valid. The acts of respondents are not prejudicial or oppressive to petitioners, nor are the company's affairs conducted prejudicially. Consequently, the petition lacks merit and is dismissed by the Tribunal.
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Minority shareholders' oppression claims against company dismissed due to lack of evidence.
The petition alleges oppression and mismanagement by the company's majority shareholders against the petitioners, who were removed as directors through an Extraordinary General Meeting (EGM). The key points are: The burden is on the petitioners to prove oppressive conduct u/s 242. The EGM notice for removal complied with legal requirements, and the meeting was validly held. The majority shareholders' decision to remove directors cannot be judicially scrutinized as it is part of corporate democracy. Mere inconvenience caused by the legal process doesn't negate its validity. Oppression requires continuous wrongful acts by the majority against the minority, not just lack of confidence. The petitioners failed to prove mismanagement or likelihood of future prejudicial conduct due to the change in management. Consequently, the petition was dismissed for lack of evidence of oppression or mismanagement.
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Petition dismissed for lack of evidence to probe companies for alleged fraud.
The petition filed u/s 213(b) of the Companies Act, 2013 alleged that the business of the respondent companies was being conducted with intent to defraud creditors, members, or others, or for fraudulent or unlawful purposes, or oppressively. However, the averments were not supported by material documents to substantiate such allegations. The documents filed failed to corroborate the allegations of fraudulent or unlawful conduct by the respondent company. The petitioner failed to make a prima facie case u/s 213(b). Consequently, the tribunal dismissed the petition in limine for lack of sufficient evidence to warrant appointing an inspector to investigate the respondent companies' affairs.
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Company petition dismissed due to lack of consent from members & time-barred allegations.
Mintainability of a company petition u/s 399 of the Companies Act, 1956, focusing on the pre-conditions envisaged under sub-sections (1) and (3). It examines whether the amendments made to the Articles of Association and declarations filed before the Registrar of Companies were prejudicial to the interests of the public, the company, and the petitioner, amounting to oppression and mismanagement. The Tribunal held that the petitioners failed to satisfy the condition precedent under sub-section (3) of Section 399 by not obtaining written consent from the rest of the members before filing the petition. Additionally, the allegations of illegal transfer of shares were barred by limitation, as the annual returns were available on the MCA website, constituting public notice. Ultimately, the Tribunal concluded that none of the allegations survived the law of limitation or constituted acts of oppression and mismanagement, leading to the dismissal of the petition as misconceived.
IBC
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Financial Creditor's Application to Initiate Insolvency Proceedings Against Corporate Debtor Upheld by NCLAT.
The NCLAT upheld the admission of the Section 7 application filed by the Financial Creditor (Respondent No.1) for initiating CIRP against the Corporate Debtor. It held that the Financial Creditor had a financial debt which had become due and payable, and there was an incidence of default. The application was filed within the time limitation as the Corporate Debtor had acknowledged the outstanding debt. The Corporate Debtor was given an opportunity to regularize its loan account but failed to pay the required amount. The declaration of the account as NPA under SARFAESI Act did not obstruct the Financial Creditor from initiating CIRP. The loan disbursement by the Financial Creditor was interest-bearing, satisfying the definition of financial debt u/s 5(8) of the IBC. The acknowledgment of debt and default was clear and unambiguous. As a debt was due and payable by the Corporate Debtor, and a default had occurred, the Financial Creditor was entitled to file the Section 7 application, which was rightly admitted by the Adjudicating Authority.
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Debt proven through part payments acknowledgment and future installment promise; 10A bar not applicable.
Existence of financial debt established through acknowledgment of part payments and promise to pay next installment. Section 10A bar not applicable as default occurred on 05.07.2021. Record of default sufficiently proved through loan documents and Corporate Debtor's admission, satisfying Section 7(3)(a) requirements. Stamping issue inconsequential given established debt and default above threshold. Authorized signatory confirmed through Board Resolution. Debt and default proven, exceeding Rs. 1 crore threshold. Petition admitted, Insolvency Resolution Professional appointed with directions to Financial Creditor regarding remuneration and expenses.
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Secured creditor's claim over remaining asset portion rejected after failing to realize security interest within time limit.
Interpretation of Regulation 21A of IBBI (Liquidation Process) Regulations, 2016 regarding secured creditor's obligation to realize security interest within stipulated time. Regulation casts duty on secured creditor to pay liquidator estimated amount or excess realized value within prescribed timeline, failing which asset becomes part of liquidation estate. Secured creditor's contention of non-communication of estimated amount by liquidator rejected as misplaced. Law mandates secured creditor to complete realization process within 180 days, after which asset vests with liquidation estate under Regulation 21A(3). Secured creditor's belated claim over remaining property portion rejected for non-compliance with 30-day intimation requirement. Liquidator's decision upheld as per regulations. Application dismissed by Tribunal.
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Firm in insolvency, transactions worth Rs. 3.87 cr under scrutiny, vehicle transfer post-initiation deemed fraudulent, respondents to contribute Rs. 13.75 lakh.
Corporate Insolvency Resolution Process initiated. Applicant alleged transactions worth Rs. 3.87 crores as preferential or fraudulent, seeking recovery from respondents. Tribunal unable to classify Rs. 3.87 crore transactions due to lack of information. One vehicle transferred post-CIRP initiation treated as fraudulent transaction. u/s 66(2)(b) IBC, respondents directed to contribute Rs. 13,74,585 to Corporate Debtor's assets for failure to exercise due diligence in minimizing potential loss to creditors. Application partly allowed.
Indian Laws
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Farmer's suit for land deal rejected due to dubious agreement, high earnest money & missing signatures.
Suit for specific performance of agreement to sell agricultural land - plaintiff paid substantial earnest money but agreement seemingly executed on blank stamp paper without plaintiff's signatures on first two pages - agreement terms irrational as earnest money disproportionately high compared to balance sale consideration - plaintiff's conduct questionable in parting with huge sum without security - courts below erred in decreeing suit based on fraudulent agreement - appeal allowed, judgments set aside.
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Undervalued property auction allowed due to delayed objection, statutory buyer to pay settlement.
The auction sale notice for the immovable property of the society under liquidation was published with a lower valuation and upset price. Despite being aware of the undervaluation, the appellant did not promptly challenge it, allowing the auction to proceed. The auction purchaser was a statutory body, the Agricultural Produce Market Committee. The court held that the appellant's delayed objection after the auction was unjustified, as it should have approached the court promptly upon noticing the undervaluation. The law discourages indolent litigants and aims to protect accrued third-party rights. Although the purchaser's statutory status does not grant immunity for acquiring property at a throwaway price, the appellant's own interests as a cooperative bank deserve consideration. Invoking Article 142, the court directed the purchaser to pay the appellant Rs. 1,05,98,710 towards full settlement of the society's outstanding dues, disposing of the appeal.
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Apex court upholds arbitral award, limits appellate court's interference.
The Appellate Court exceeded its jurisdiction u/s 37 of the Arbitration and Conciliation Act, 1996, by setting aside an arbitral award that had already been confirmed u/s 34. The Supreme Court reiterated that courts should not interfere with arbitral awards lightly, and mere possibility of an alternative interpretation does not warrant reversal. The scope of intervention is confined to grounds specified u/s 34, and the appellate power u/s 37 is limited to examining if the court u/s 34 acted within its limits. The Appellate Court cannot reappraise evidence on merits as an ordinary court of appeal. Since the arbitral award was reasonable, based on evidence, and not against public policy or law, it was rightly upheld u/s 34. The Appellate Court erred by setting it aside without finding any illegality u/s 34. Merely having a better view is no ground for interference. The Supreme Court set aside the Appellate Court's judgment and restored the arbitral award.
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Bidders' plea against GST registration mandate dismissed for lack of merits and defective affidavit.
Writ petition challenging requirement of GST registration for bidders dismissed. Court held role in tender matters restricted unless action palpably unreasonable or mala fide. Petitioners' registered offices in West Bengal, but address in Assam vague. Affidavit defective as deponent's authority for other petitioners not stated. Petitioners' conduct in approaching court questionable. Writ petition lacking merits, hence dismissed.
PMLA
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Alleged illegal mining, e-rawanna fraud but no evidence against petitioner's involvement in money laundering or proceeds of crime.
Proceeds of crime and legality of petitioner's arrest under PMLA for alleged illegal mining were examined. Grounds of arrest and reasons to believe were based solely on purported illegal mining by fabricating e-rawana bills. In first eight FIRs, petitioner was not an accused. In ninth FIR too, petitioner was not named, but ED tried implicating him as Director of DSPL, which records showed he ceased being from 07.11.2013. ED failed to substantiate petitioner's involvement as Director, Promoter or shareholder of the alleged GM Co. No material showed petitioner directly or indirectly indulged in any process connected with proceeds of crime or projected untainted proceeds. No grounds for arrest under PMLA were made out against petitioner for money laundering offence. Petitioner not being involved in any illegal activity attracting PMLA offence, petition was allowed for his release if not required in any other case.
SEBI
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Real Estate Investment Trust rules tweaked for faster payouts, easier voting & digital access.
This notification amends the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014. Key changes include: Modifying timelines for distribution payment to unitholders, revising voting thresholds for approval of resolutions, allowing shorter notice for unitholder meetings with consent, mandating option for video conferencing and remote e-voting, maintaining electronic records with backup and business continuity plans. It streamlines operational aspects related to distributions, voting procedures, meetings, and record maintenance for greater efficiency and unitholder participation.
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SEBI amends InvIT rules: raises trading lot size, mandates distribution frequency, revises voting norms, e-records compliance.
This notification amends the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014. Key changes include: trading lot size for units increased to INR 25 lakhs; distribution frequency mandated at least semi-annually for publicly offered InvITs and annually for privately placed InvITs, with distribution within 5 working days of record date; voting thresholds revised, with provisions for video conferencing and remote e-voting; and requirements for electronic record maintenance, backup systems, business continuity plans and disaster recovery sites.
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Foreign Venture Capital Investors face stringent compliance: Monthly reports, KYC norms, reporting ownership changes.
The key points covered in the given text are as follows: 1. Foreign Venture Capital Investors (FVCIs) are required to submit monthly reports on investments and fees collected to SEBI through Designated Depository Participants (DDPs). 2. Procedures are outlined for various activities like name change, surrender of registration, change in DDP, reporting material changes, and handling non-compliant jurisdictions. 3. Detailed KYC requirements are specified for FVCIs, including documentation, identification of beneficial owners, periodic reviews, data security measures, and maintenance of records. 4. Guidelines are provided for acceptable proof of address, attestation of documents, and reliance on public sources for verification. 5. The process for FVCIs to open bank accounts by sharing KYC documents with banks is described. 6. Formats are provided for DDPs to submit monthly reports to SEBI on applications received/disposed and fees collected from FVCIs. 7. Instructions are given for FVCIs to report intermediate material shareholders/owners on ownership and control basis for identification of beneficial owners. The text comprehensively covers the regulatory requirements and operational procedures related to registration, reporting, KYC compliance, and fee payments for Foreign Venture Capital Investors in India.
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Faster Listing of Debt Securities: SEBI Cuts Listing Timeline to T+3 for Quicker Access to Funds.
SEBI has decided to reduce the timeline for listing of debt securities and non-convertible redeemable preference shares (NCRPS) issued through public issues from T+6 working days to T+3 working days. This move aims to facilitate faster access to funds for issuers and provide early credit and liquidity for investors. Initially, the T+3 listing timeline will be optional for issuers for one year, after which it will become mandatory. During the voluntary period, provisions related to refund of application money will apply only after T+6 days, even if the issuer opts for T+3 listing but fails to meet it. The circular provides an indicative timeline for activities involved in the public issue process under the T+3 regime. Stock exchanges will monitor compliance and the provisions will be applicable from November 1, 2024 on a voluntary basis and November 1, 2025 mandatorily.
Service Tax
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Taxman's Demands Face Scrutiny: Composition Scheme Misuse, Short Payments & Improper Credits.
The summary focuses on the irregular availment of the Composition scheme and various demands raised by the adjudicating authority, along with the CESTAT's findings. It covers short payment of tax due to discharge at an incorrect rate, improper application of accrual/realization basis, discrepancies in GL codes and returns, non-maintenance of separate records for dutiable and exempt services, and irregular reversal of Cenvat credit for bad debts written off. The CESTAT examined each issue, relying on relevant legal provisions and judicial precedents. It set aside several demands, upheld a minor demand, and held that extended period invocation and penalties were not warranted due to lack of suppression of facts with intent to evade tax. The appellant's compliance with record-keeping requirements and regular filing of returns were also considered.
Central Excise
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Popcorn waste: Recycling plastics for polyester fiber: Duty benefit allowed despite using small quantity of non-plastic waste.
The appellant manufactured polyester staple fiber (PSF) using PET bottles scrap (90%) and popcorn waste (less than 10%). The department denied the nil/concessional duty benefit under relevant notifications, alleging popcorn is not plastic waste and the appellant suppressed facts. The Tribunal held that in the absence of words like 'only', 'exclusively' in the notifications, the benefit cannot be denied merely for using a small quantity of popcorn waste along with PET bottles scrap. Popcorn being manufactured from plastic waste/scrap, cannot be excluded from the notifications' scope. Regarding extended period of limitation, the Tribunal held that mere non-disclosure is not suppression unless deliberate to evade duty. The appellant disclosed using popcorn in statements/returns, hence no suppression. The department failed to establish the appellant deliberately suppressed facts to evade duty, thus extended period was wrongly invoked. The Tribunal set aside the impugned order, allowing the appeals. The penalty on the Director was also questioned as the department failed to prove the Director dealt with confiscatable goods knowingly.
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Corrugated sheets sans boxes: Duty-free under exemption notification.
Corrugated board cleared independently without corrugated boxes is classified under Tariff Item 48191090, making it eligible for exemption under Notification No.04/2006-CE, Entry No.96E. Even if classified under 48191090, the goods are covered under the exemption notification. Alternatively, if the corrugated sheet is cleared without boxes, it is appropriately classifiable under 48081000, with the same rate of duty and exemption applicability as 48191010 during the relevant period. The adjudicating authority correctly classified the goods under 48081000 and dropped the demand raised in the show cause notice. The CESTAT upheld the impugned order, dismissing the Revenue's appeal.
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Specialized gas mixture wrongly classified as compressed air, attracting higher duty.
Goods classified as 'Zero Air' cleared by appellant from December 2002 to June 2007 were classifiable under Chapter Heading 2804 attracting 16% duty, not under Chapter Heading 2851 as compressed air attracting NIL duty. Evidence showed 'Zero Air' contained 78% Nitrogen, 20.8% Oxygen, 1.2% Argon, different from compressed air composition. It was used in Gas Chromatograph testing where compressed air cannot substitute. Classifying it as compressed air involved suppression of facts, justifying extended period invocation. From July 2007, appellant discharged duty classifying it under Chapter Heading 2804. Appeal against confirmed order rejected, upholding classification under Chapter Heading 2804 attracting 16% duty.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (9) TMI 1644
Validity of SCN - carry forward of transitional credit - It has been argued on behalf of the petitioner that for the same amount of Input Tax Credit availed by the petitioner, once the proceedings under Section 73 have been dropped in favour of the petitioner, same cannot be reopened under Section 74 of the CGST Act by simply stating that the petitioner had availed excessive Input Tax Credit - HELD THAT:- The impugned Show Cause Notice does not make even a whisper of the fact that petitioner has wrongly availed or utilized Input Tax Credit due to any fraud, or wilful mis-statement or suppression of facts to evade tax therefore, the proceedings initiated against the petitioner u/s 74 of the CGST Act are without jurisdiction for the lack of basic ingredients required under the said clause. So far as the argument advanced by the learned counsel appearing for the respondents that the writ petition against the Show Cause Notice is not maintainable, is concerned, we find that it is consistent view of the Hon ble Supreme Court that if the Show Cause Notice is without jurisdiction then the same can be challenged by filing writ petition before the High Court under Artilce 226 of the Constitution of India. It is not found that the basic ingredients required for initiating proceedings under Section 74 of the CGST Act are present in the impugned Show Cause Notice dated 30.12.2023. Therefore the entire exercise including the Show Cause Notice is without jurisdiction and thus this writ petition under Article 226 of the Constitution of India is maintainable. The impugned Show Cause Notice dated 03.08.2024 in its present form lacks basic ingredients to proceed in the matter under Section 74 of the CGST Act. Therefore, the impugned Show Cause Notice dated 03.08.2024 and the entire exercise initiated pursuant thereto is absolutely without jurisdiction and is liable to be quashed. Petition allowed.
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2024 (9) TMI 1643
Maintainability of petition - availability of remedy of appeal u/s 107 of the Act - violation of Section 75(4) of UPGST Act - denial of opportunity of personal hearing - violation of principles of natural justice - HELD THAT:- It is basic to procedural law under taxing statutes that opportunity of personal hearing must be provided to an assessee before any assessment/adjudication order is passed against him. Thus, it is strange and wholly unacceptable merely because the substantive law has changed, the revenue authorities have changed their approach and are failing to observe the mandatory requirement of procedural law. They have thus denied opportunity of hearing to the assessee. It transpires from the record, neither the adjudicating authority issued any further notice to the petitioner to show cause or to participate in the oral hearing, nor he granted any opportunity of personal hearing to the petitioner. Thus, before any adverse order passed in an adjudication proceeding, personal hearing must be offered to the noticee. If the noticee chooses to waive that right, occasion may arise with the adjudicating authority, (in those facts), to proceed to deal with the case on merits, ex-parte. Also, another situation may exist where even after grant of such opportunity of personal hearing, the noticee fails to avail the same. Leaving such situations apart, we cannot allow a practice to arise or exist where opportunity of personal hearing may be denied to a person facing adjudication proceedings. In the present case, show cause notice has been issued in the year 2019 and the impugned order has been passed in the year 2024. Inordinate delay of five years in passing the order impugned is clearly a manifestation and violation of principles of natural justice. The impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice - Petition allowed.
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2024 (9) TMI 1642
Direction to respondents to reimburse the extra GST amount paid along with interest - grievance of the petitioner is that despite the aforesaid enhancement from 01.01.2022, the respondents are paying the running bills with 12% GST and the petitioner is paying 18% GST - HELD THAT:- Respondent No.4 which is a State GST Department, according to which also the rate of GST has been enhanced from 12% to 18% and same is liable to be paid by respondent No.2 which is a Government Entity. The respondent No.2 is directed to pay the difference of GST amount to the petitioner @ 6% from 01.01.2022 to 30.09.2022 with a period of three months from the date of receipt of certified copy of this order, failing which the petitioner shall be entitled for interest @ 6% per annum from the date of entitlement. Petition disposed off.
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2024 (9) TMI 1641
Action on the part of the respondent authorities in not reflecting the payments so made by the petitioners pursuant to the final demands raised - Time limitation - HELD THAT:- Section 129 (5) of the State Act only stipulates that upon payment of the entire amount as referred to in Sub-section (1) of Section 129, all proceedings in respect to the notice specified in Sub-section (3) shall be deemed to be concluded. The said provision therefore shows that upon payment of the amount, the proceedings in respect of the notice specified in Sub-section (3) shall be deemed to be concluded. The said provision would in the opinion of this Court, would apply only in circumstances, when pursuant to a Show Cause Notice issued under Section 129 (3), the entire amount so stated therein is paid. In contrast, it would be relevant to observe that Section 129 (3) also refer to an order to be passed within 7 days from the date of service of such notice. However, Section 129 (5) only refers to the notice and not to the order. In that view of the matter, this Court is of the opinion that right to file appeal by the petitioners cannot be taken away merely because the petitioners have paid the entire amount demanded in the orders passed under Section 129(3) of the State Act. This Court is of the opinion that on account of the fault of the respondent authorities, the petitioners were not able to file appeals against the respective orders dated 19.10.2023 and 12.09.2023 passed under Section 129 (3) of the State Act - Petition disposed off.
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2024 (9) TMI 1640
Revocation of suspension of the petitioner s Goods and Services Tax (GST) registration - reasons set out in the impugned SCN are not intelligible - principles of natural justice - HELD THAT:- The copy of the reply filed by the petitioner is annexed to the present petition. It indicates that no supporting documents have been furnished by the petitioner. It is considered apposite to permit the petitioner to furnish all such documents as are considered relevant to establish that he was functioning at his principal place of business, within the period of one week from date. The respondents are directed to consider the same and pass an appropriate order after affording the petitioner an opportunity to be heard. Petition disposed off.
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2024 (9) TMI 1639
Cancellation of registration of petitioner - appeal was dismissed on the ground of limitation - challenge to order of cancellation of registration on the ground of not providing an opportunity of hearing as well as such order was passed without assigning any reason for cancellation of the registration of the petitioner - HELD THAT:- The Coordinate Bench of this Court in case of M/s. Aggrawal Dyeing Printing vs. State of Gujarat [ 2022 (4) TMI 864 - GUJARAT HIGH COURT ] has held that ' The procedural aspects should be looked into by the authority concerned very scrupulously and deligently. Why unnecessarily give any dealer a chance to make a complaint before this Court when it could have been easily avoided by the department.' In the present matter, order of cancellation of registration is passed without giving any reason by the respondent authorities, and appeals filed by the petitioners under Section 107 of the GST Act are also dismissed. As the Appellate Authority has dismissed the appeals of the petitioner, the respondent authorities will not be able to exercise the revisional power under section 108 of the GST Act. Therefore, the impugned order passed by the Appellate Authority as well as the order of cancellation of registration are required to be quashed and set aside - the matter is remanded back to the Assessing Officer at the show cause notice stage. This petition is partly allowed by quashing and setting aside the impugned order passed by the Appellate Authority as well as order of cancellation of registration and the matter is remanded to the Assessing Officer at show-cause notice stage, however, the registration number of the petitioner shall remain suspended till such show cause notice is disposed of - petition disposed off by way of remand.
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2024 (9) TMI 1638
Refund of accumulated input tax credit (ITC) - zero rated supply - Mismatch in ITC as per GSTR-2B and GSTR-3B - HELD THAT:- Although the appellate authority has faulted the adjudicating authority for not carefully examining the reconciliation statement and passing a refund order to the extent of ₹12,04,443/- without sufficient discussion, the appellate authority has also not examined the question of reconciliation. There is neither any discussion nor any finding regarding the reconciliation statement furnished by the petitioner. In terms of Section 107 (11) of the CGST Act, the appellate authority is required to decide the question in issue and cannot remand the matter to the adjudicating authority. In the present case, although, the appellate authority has faulted the adjudicating authority in not addressing the question of reconciliation statement, the appellate authority has also not addressed the same. It is considered apposite to set aside the impugned order and remand the matter to the appellate authority for consideration afresh - petition disposed off by way of remand.
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2024 (9) TMI 1637
Seeking cancellation of GST registration of the petitioner - petitioner had discontinued its business - HELD THAT:- It is considered apposite to direct the proper officer to process the petitioner s application as expeditiously as possible. Petition disposed off.
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2024 (9) TMI 1636
Claim of wrongful refund - willful mis-declaration of the available ITC - one single order for two Financial Years - jurisdiction to issue SCN - it is contended that the authority who has issued the Show Cause Notice could only pass the impugned order - time limitation - HELD THAT:- The parameters under which this Court ought to entertain the writ petition are not satisfied. Be that as it may, it is also pertinent to take note of that this Court is not exercising its jurisdiction on the ground that the Petitioners herein have an adequate, alternative and efficacious remedy provided under Section 107 of the Assam GST Act, 2017. It is however apposite to mention that in order that the remedy which is available to the Petitioners is an efficacious and adequate remedy, the Petitioners should also be able to raise all the issues which the Petitioners could have raised in the instant proceedings. This Court is not inclined to entertain the instant writ petition insofar as the challenge to the impugned order dated 12.08.2024 on the ground of availability of alternative and efficacious remedy. However, the Petitioner herein would be at liberty to file an appeal under Section 107 of the AGST Act, 2017. This Court had perused the materials on record and there is no mention as to how much amount/amounts lying in the bank accounts of the Petitioner No. 2 and his relatives which have been frozen. There is also no mention as to whether the Petitioners have other bank account(s). It is also clear from the mandate of Section 107 (6) (b) of the Act of 2017 that the pre-deposit of 10% of the tax amount is required to be deposited and there is no provision for waiver by the Appellate Authority. It is well settled that the amount to be paid as pre-deposit is for filing or entertaining the Appeal and not for realization of the tax amount . In the account(s) which have been frozen as stated in the Show Cause Notice dated 09.04.2024 and if the said accounts are still unoperational on account of the freeze, the Appellate Authority is directed to permit the filing of the Appeal(s) as well as to entertain the Appeal(s) without any predeposit subject to the accounts which have been frozen (the details mentioned in the Show Cause Notice dated 09.04.2024), has/have deposit(s) equivalent or more than the amount required to be deposited in terms with Section 107 (6) (b) of the Act of 2017. Petition disposed off.
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2024 (9) TMI 1635
Demand in respect of ITC to be reversed on non-business transactions and exempt supplies - HELD THAT:- Respondent no. 1 cannot adjudicate a demand, which is also the subject matter of other proceedings. Since, the period covered under the impugned order is also subsumed in the show cause notice issued by the DGGI, both the proceedings cannot be carried on simultaneously. The impugned demand is required to be set aside - Petition allowed.
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2024 (9) TMI 1634
Direction to process the refund applications filed by the petitioner u/s 54 of the Central Goods and Services Tax Act, 2017 (CGST Act)/ Delhi Goods and Services Tax Act, 2017 (DGST Act) - prayer for directions be issued for grant of provisional refund in terms of Section 54 (6) of the CGST/DGST. The respondents states on instructions that the petitioner s applications are lodged. They will be processed within a period of one month from date and appropriate orders would be passed. HELD THAT:- The respondents are bound down to the said statement. Needless to state that if the respondents propose to reject these applications filed by the petitioner, the respondents shall indicate the reasons for doing so and pass an order after affording the petitioner an opportunity to be heard. Petition disposed off.
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2024 (9) TMI 1633
Seeking direction to respondents to expeditiously establish the GST Appellate Tribunal in the State of Kerala in accordance with the provisions of Section 112 of the CGST Act 2017 forthwith - Revenue submits that the steps have already been taken to establish the GST Appellate Tribunal and the selection process is going on - HELD THAT:- This submission is recorded. Rectification of Section 169 of the CGST Act 2017 by correcting the erroneous usage of the word or with the correct word and , thereby such amendment will mandate assessing officers to serve notices and orders through at least minimum of three alternative modes of service, ensuring compliance with the principles of natural justice and providing an opportunity for affected parties to be heard - HELD THAT:- This Court cannot grant such a relief in the public interest litigation filed by the petitioners. The individual grievance of the person will have to be considered in appropriate manner in an individual litigation to be initiated by such person - the prayer is declined. In the light of the fact that the process has already been initiated to establish the GST Appellate Tribunal, it is ordered that entire selection process shall be completed within a period of four months. The writ petition is disposed of.
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Income Tax
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2024 (9) TMI 1632
AO jurisdiction to issue notice u/s 143[2] on the relevant date - ITAT quashing the assessment order passed u/s 143(3) by the Income Tax Officer, Ward-9(2), Kolkata on the ground of lack of jurisdiction - lack of jurisdiction without considering Sub-section (2) of Section 124 and Sub-Section (3) of 127 - As decided by HC [ 2023 (1) TMI 1418 - CALCUTTA HIGH COURT] legal position had been rightly taken note of by the learned tribunal and the assessee cannot be prevented from raising the question of jurisdiction which is an issue which goes to the root of the matter and the learned tribunal had rightly permitted the assessee to canvas the issue and also rightly concluded that the assessment was bad in law - revenue could not factually controvert the submissions of the assessee that notice u/s 143[2] and section 142[1] of the Act was issued by an officer, who did not have jurisdiction over the assessee. HELD THAT:- The tax amount involved in the present case is about ₹1,50,000/- ( Rupees one lakh fifty thousand only ). It is stated that the legal issues raised in the present case are also pending adjudication in other cases. Such legal issues would be decided in the said cases. We fail to understand as to why, for such a petty amount, the petitioner, Principal Commissioner of Income-Tax 1, has approached this Court. There is also a delay of 477 days in the filing of the present special leave petition. Accordingly, the application for condonation of delay as well as the special leave petition are dismissed.
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2024 (9) TMI 1631
Validity of reassessment proceedings against non-existent entities/ amalgamanting compnaies - Reassessment action initiated by the respondents on the ground of the amalgamated entity having never been placed on notice - as argued no notices were served upon the amalgamated entity and orders of assessment as well as notices of reassessment were maintained in the name of the amalgamating entity - HELD THAT:- Position in law appears to be well- settled that a notice or proceedings drawn against a dissolved company or one which no longer exists in law would invalidate proceedings beyond repair. Maruti Suzuki conclusively answers this aspect and leaves us in no doubt that the initiation or continuance of proceedings after a company has merged pursuant to a Scheme of Arrangement and ultimately comes to be dissolved, would not sustain. We note that in this batch of writ petitions and in light of the disclosures which have been made, the assessees clearly appear to have apprised their respective AOs of the factum of amalgamation and merger at the first available instance. If the respondents chose to ignore or acknowledge those fundamental changes, they would have to bear the consequences which would follow. Once the Scheme came to be approved, the transferor companies came to be dissolved by operation of law. They, thus, ceased to exist in the eyes of law. Proceedings thus drawn in their name would be a nullity and cannot be validated by resort to Section 292B of the Act. The submission of the respondents based on Sections 159 and 170 of the Act is equally misconceived. It becomes relevant to note that Section 159 places the liability of a deceased assessee on its legal representatives. It thus creates a right of recourse for the Revenue to pursue and recover outstanding demands. We fail to appreciate how that provision could have any bearing on the question that stood posited. The proceedings impugned herein are not in relation to any right of recovery that may have been asserted or proposed. The challenge is to orders of assessment and initiation of reassessment made or commenced against a non-existent entity. While the respondents sought to draw sustenance from the phrase when the predecessor cannot be found as appearing in sub-section (2) thereof, we find ourselves unable to read that expression as being akin to a dissolution of a corporate entity or its merger with another. The expression cannot be found cannot be construed as having been intended to cover situations where an entity ceases to exist in law by virtue of an amalgamation or merger. Regard must also be had to the heading of Section 170 and which speaks of succession to a business otherwise than on death . It is thus concerned with a specific contingency pertaining to succession to a business and how the predecessor and successor are liable to be taxed. It has no concern with the question of whether a notice or order in the name of a non-existent entity could be treated as valid in law. AO invoked Section 154 asserting that the assessment order had inadvertently come to be framed in the name of EHSSIL - Admittedly, the factum of merger had been duly brought to the attention of the AO. The merger was taken into consideration at more than one place in the order of assessment that came to be framed. Despite the above, the AO proceeded to draw the order in the name of an entity which had ceased to exist. We also bear in consideration the indubitable fact that the rectification order came to be passed three years after the framing of the original order of assessment, and that too, during the pendency of the appeal of the assessee and where a specific ground of challenge was raised in this regard. This was therefore not a case of discovery of an inadvertent error or mistake immediately after the passing of an order. We also bear in consideration Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT] having clearly held that such a mistake would not fall within the ken of Section 292B of the Act. An exercise of rectification as undertaken in the present case, if accorded a judicial imprimatur, would in effect amount to recognising a power to amend, modify or correct in an attempt to overcome a fundamental and jurisdictional error contrary to the principles enunciated in Maruti Suzuki. We also cannot lose sight of the fact that this was not a case where the assessee had attempted to mislead or suppress material facts and which may have warranted the case of the assessee being placed in the genre which was considered in Mahagun Realtors. The mere submission of replies on the letter head of EHSSIL also fails to convince us to hold in favour of the Revenue. In any event, none of the authorities below have held that the appellant was guilty of suppression. We would thus be inclined to allow the instant appeal and answer the question as posed in favour of the appellant and against the Revenue. Notices issued u/s 142 (1) on the ground that although they have been drawn in the name of the resultant entity which came into existence consequent to a Scheme being approved, they bear the PAN of the erstwhile entity and which had since then ceased to exist - We find ourselves unable to place that mistake in the category of a fundamental flaw or incurable illegality as explained in Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT] Although in the writ petition it is averred that the original Section 148 notice was never served upon the petitioner, we find that the order of 15 March 2022 speaks of various subsequent notices which had been issued and remained unanswered. In any event, the present writ petitions merely impugn the notice under Section 142 (1) with no challenge having been mounted in respect of the original notice of reassessment. These petitions would consequently merit dismissal. Whether disclosures with respect to the sanction of the Scheme were made in the course of the assessment proceedings? - The respondents categorically assert that no information with respect to a Scheme that may have been approved was provided during the course of assessment. The petitioners on the other hand aver that the respondents had been duly placed on notice of the proceedings pending before the NCLT and which had preceded the ultimate approval of the Scheme. In W.P.[above] petitioners allude to a communication issued by the Regional Director while the Scheme was pending approval. As is manifest from the aforesaid recordal of facts, there was an abject and evident failure on the part of the petitioners to apprise the respondents of a Scheme which stood duly approved. Even if the concerned AO were assumed to have derived knowledge of the pendency of proceedings before the NCLT or called upon to furnish a consent to the proposed Scheme, the same would not absolve the assessee from the obligation of duly apprising the respondents once a Scheme of Arrangement came to be approved. These writ petitions would thus merit dismissal.
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2024 (9) TMI 1630
Validity of notices u/s 133 (6) and subsequent notice u/s 148 - HELD THAT:- Almost in similar facts, the High Court of judicature of Bombay in Benaifer Vispi Patel [ 2024 (8) TMI 53 - BOMBAY HIGH COURT] found that while the Central Government is empowered under Section 135A of the Act to make a scheme of income tax in the official gazette for the purpose of collecting information under Section 133B of the Act or for demanding the information under Section 133C of the Act, or by exercising power of inspection under Section 134 of the Act or under Section 135 of the Act, however, the same has to be exercised with due caution and care. While the petitioner was served with a notice under Section 133 (6) of the Act in the present case and reply was filed, the reply was ignored stating that the same has not been filed. In circumstances where the information may not have been received in the electronic mechanism system which is also prone to errors, once it has come on record that reply had actually been filed, it would be wholly unjustified to allow the Revenue to make the assessee face the cumbersome proceedings under Section 148 of the Act. Having proceeded on a presumption that reply not having been filed and the amount having escaped from income tax assessed, we are satisfied that the said amount was already recorded and included in the ITR for the AY 2020-21 and the same was duly processed by the AO and it was offered for tax as part of business turnover. We are satisfied that the impugned notice u/s 148 of the Act in the present case has been issued without application of mind and stands vitiated on that count. The proceedings initiated, therefore, are not sustainable in law. Notice dated 31.03.2024 has been issued by the ACIT Central Karnal and the notices issued under Section 133 (6) and Section 148 of the Act were issued by the jurisdictional Assessing Officer . He, therefore, was also not competent to issue the same in view of the judgment passed in Jasjit Singh [ 2024 (8) TMI 228 - PUNJAB AND HARYANA HIGH COURT] wherein held notices issued by the JAO under Section 148 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B have been found to be contrary to the provisions of the Act, 1961 and accordingly set aside. Thus, we find the notices are not sustainable in law. We, accordingly, quash the impugned notices issued under Section 133 (6) of the Act, consequential notice dated 31.03.2024 issued under Section 148. WP allowed.
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2024 (9) TMI 1629
Validity of the order passed by the Income Tax Settlement Commission [ITSC] - restricting Applicability of interest u/s 234B on the total income which came to be disclosed in the Statement of Facts [SOF] up to the date of admission of that application u/s 245D (1) - HELD THAT:- As a sine qua non for the consideration of the application, the ITSC must firstly be satisfied that the applicant has made a full and true disclosure with respect to all details pertaining to income and the amount at which a settlement is prayed to be entered. This becomes apparent from Section 245D (1) enabling the ITSC to issue a notice to the applicant to explain why the application so made be allowed to be proceeded with. ITSC is further enabled to call for reports and records from the Principal Commissioner with respect to the disclosures as made in such an application. It is only after the ITSC is convinced that a full, true and candid disclosure has been made by the applicant, that the same is admitted for further consideration. The amount which the applicant may ultimately be called upon to pay could hypothetically be more than that which may be disclosed in the SOF. This is by virtue of the exercise and inquiry which the ITSC is enabled to undertake in terms of sub-sections (3) and (4) thereof. It is only upon the conclusion of that inquiry that the ITSC proceeds to fame a formal order in terms contemplated under sub-section (4)(a) and frame consequential directions in accordance with sub-section (6). As in the case of Brij Lal [ 2010 (10) TMI 8 - SUPREME COURT] makes a clear distinction between the admission of an application under Section 245D (1) and the determinative exercise which the ITSC ultimately takes under Section 245D (4). It has in unequivocal terms observed that the interest liability flowing from Section 234 B cannot go or travel beyond the date of admission of the application under Section 245D (1). We are, therefore, of the firm opinion that the ITSC clearly committed no error in restricting the interest liability to the date of admission of the application. We find no merit in the challenge which stands mounted. The writ petition fails.
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2024 (9) TMI 1628
Levy of penalty u/s. 271G - assessee failing to furnish documents and information u/s. 92CA/92D - HELD THAT:- There is no finding by the TPO / AO in the transfer pricing orders stating that the information / explanations provided by the assessee during the transfer pricing assessment proceedings were inaccurate or that there was any insufficient information / explanation preventing the TPO from determining the arm s length price. On the contrary, the Transfer Pricing Officer has acknowledged that the assessee has furnished the details and information. There is no finding recorded by the TPO that the conduct of the assessee lacks bonafides or there any indifference on the part of the assessee in not producing the records called for by the TPO leading to inability on the part of the TPO to determine the arm s length price. The most important factor is that whatever TP adjustment has been done by the TPO has been deleted by the DRP and the Revenue has accepted the order of the DRP. On similar facts in the case of Ankit Gems (P) Ltd. [ 2019 (7) TMI 13 - ITAT MUMBAI] has held that where TPO had accepted benchmarking done by assessee under TNMM and no variation / adjustment was made by him to ALP imposition of penalty u/s. 271G would be unsustainable. Appeals by the assessee are allowed.
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2024 (9) TMI 1627
Revision u/s 263 - primary contention of the PCIT was that the AO failed to disallow unpaid leave salary u/s 43B and did not verify the claim of depreciation and additional depreciation on fixed assets - HELD THAT:- Upon examining the facts, it is evident that the AO had thoroughly reviewed the relevant details during the assessment proceedings. The Tax Audit Report, specifically Column 26(i)(A)(b), clearly indicated that the unpaid leave salary was disclosed as a liability and not claimed as a deduction. Only the amount paid was claimed in the profit and loss account, which was appropriately considered by the AO. This explanation was corroborated by detailed submissions, including ledger accounts and prior years' computations provided to the PCIT, demonstrating that there was no duplication of deductions. As regards depreciation, AO reviewed the audited financial statements and the Tax Audit Report, particularly Form 3CD, which detailed all additions to fixed assets and the corresponding depreciation claimed. The auditor, had certified these claims, confirming their accuracy and compliance with the provisions of the Act. The purpose of the Tax Audit under section 44AB of the Act is to ensure that financial records and claims are thoroughly verified by an independent professional, providing a reliable basis for the AO to rely upon. If the AO is expected to recheck all the details already certified by the auditor, especially when there are no specific qualifications or adverse remarks in the audit report, it would undermine the very purpose of the audit under section 44AB - AO appropriately relied on the certified audit report, as intended by law, and no further verification was necessary in absence of any discrepancies noted by the auditor. AO s acceptance of the depreciation claim was fully justified and in line with the principles underlying the audit provisions. For invoking jurisdiction u/s 263, it must be established that the assessment order is both erroneous and prejudicial to the interest of the revenue. In the present case, the AO s order was based on a conscious examination of the records, and no substantive errors were pointed out by the PCIT that would indicate any failure in the verification process. The assessee s argument that even if the unpaid leave salary and additional depreciation were disallowed, the resulting tax effect would be NIL due to the large available deduction u/s 80IA is relevant. The gross total income before deduction u/s 80IA was Rs. 12,04,36,098/-, and the available deduction under Section 80IA was Rs. 17,43,55,892/-. Thus, the taxable income would still remain NIL, demonstrating that there is no prejudice to the revenue. The absence of proper inquiry led to an assessment order lacking the basic elements of scrutiny expected of the AO. Conversely, in present case under adjudication, the AO did not overlook critical details; instead, the alleged issues were evaluated, and decisions were made based on certified records. The PCIT s contention that further inquiry was needed was speculative and not supported by any specific evidence of actual errors. In case of Kandi Friends Educational Trust [ 2013 (10) TMI 1224 - PUNJAB AND HARYANA HIGH COURT] the lack of inquiry raised significant questions about whether the income of the trust was properly exempt under Section 11 of the Act, directly impacting the tax liability. In present case, the potential disallowances would not impact the tax liability due to the extensive section 80IA deduction available, making the order not prejudicial to the revenue in any practical sense. PCIT s revisionary action was futile as the enhanced profits, even if added back, would be fully offset by the remaining section 80IA deduction. Thus, the conditions of being erroneous and prejudicial to the revenue under Section 263 are not satisfied - Appeal filed by the assessee is allowed.
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2024 (9) TMI 1626
Penalty u/s 271(1)(c) - addition on account of short credit of sale consideration received from the sale of copy rights and cable rights - non specification of clear charge - concealment of income v/s furnishing inaccurate particulars of income - whether the penalty under section 271(1)(c) is sustainable in the light of the procedural lapse raised by the assessee? - HELD THAT:- It is settled position of law that in the penalty proceedings under section 271(1)(c), AO must clearly specify whether the penalty is being levied for concealment of income or furnishing inaccurate particulars of income. In the present case, notice issued u/s 274 r.w.s. 271(1)(c) does not specify the nature of default. Several judicial precedence have held that when the charge is not clearly specified in the penalty notice, the penalty proceedings are rendered invalid. Hon ble Supreme Court in the case of CIT Anr, -vs.- M/s SSA s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] and in the case of Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] have held that vague notice u/s 274 rendered the penalty proceedings are void ab initio. In the present case, AO failed to specify the exact charge whether concealment of income or furnishing inaccurate particulars of income, which is clearly procedural lapse, since the penalty proceedings initiated without clarify on this issue. The imposition of penalty cannot be sustained. Even on merits, the addition sustained by the CIT(Appeals) related to disputed adjustment of sale consideration of copy rights and cable rights. There is no finding that the assessee deliberately concealed its income or furnished inaccurate particulars of income. The explanation officered by the assessee appears to be bonafide one and there is no evidence suggests the malafide intention on the part of assessee. Appeal of the assessee is allowed.
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2024 (9) TMI 1625
Legality of the order u/s.143(3) - validity of action of the AO as the same has been passed u/s 143(3) of the Act as against the specific provisions u/s 153C - HELD THAT:- On perusal of the satisfaction note it reveals that same was recorded on 10-10-2022 by the AO after giving the findings that the seized assets and documents /digital data and information relates to assessee and it is a fit case for initiating proceedings u/s 153C r.w.s 153A of the Act for the A.Y. 2015-16 to 2020-21. The AO has issued the notice u/s.143(2) of the Act. On the similar facts, the coordinate Bench of the Tribunal in the case of Jasjit Singh [ 2014 (11) TMI 1012 - ITAT DELHI] it was held that the date of receiving of the seizes documents would become the date of search and six years period would be reckoned from this date The date of recording of the satisfaction will be the deemed date for the possession of the seized documents which is 03-10-2022 and six years would be reckoned from this date. The submission made by Ld AR is tenable that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and six years immediately preceding the assessment year relevant for u/s 153C of the Act will be AY 2018-19 to 2022-23. The assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act. There fore the assessment order dated 29-12-22 passed u/s 143(3) of the Act is bad in law and liable to be quashed and quashed accordingly. The additional grounds filed by the assessee are allowed.
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2024 (9) TMI 1624
TDS u/s 195 - assessee has paid an amount to the secondment employees of the parent companies - DRP after perusing the contract of agreement between Assessee and Toshiba Japan vis- -vis placement of employees in India, formed a view that there was no employer employee relationship between the assessee and secondment employees and the amount which has been paid was in the nature of Fee for Technical Services (FTS) and hence the assessee ought to have deducted the TDS u/s 195 - HELD THAT:- When we go through the agreement then we find that there are certain other clauses like clause No.3.8 which says that tools, equipment, infrastructure and other information necessary for the international assignees (secondment employees) to carry out their duty would be provided by the assessee. Similarly, clause 11 would show that the assessee has also agreed to indemnify the parent company with respect to all claims remedies arising out of the Acts of international assignees (secondment employees). Similarly other clauses of the agreement would show that the international assignees would have lien to their jobs in the parent company after the termination of the secondment employment agreement. All these clauses are required to be investigated by the AO to find out the true nature of the payments made to the secondment employee. We remit the entire issue to the file of AO for denovo examination considering additional evidences filed by the assessee before us. We also direct the AO to consider the alternative plea of the assessee. Disallowance of technology fees paid by the assessee to the parent company - As assessee could not be able to establish with cogent material that the AE had actually rendered services to the assessee and assessee has also failed to derive any benefits from these payments - So far as the benefits factor is concerned, the courts have time and again held that the TPO/DRP/A.O cannot disallow the genuine expenses on the ground that no benefits have been received by an assessee. A reference can be made to the judgment of case of Ekal Application [ 2012 (4) TMI 346 - DELHI HIGH COURT] So far as rendering of services from the parent company to the assessee is concerned, the assessee has simply filed some e-mail correspondence between the parent company and the assessee. In our view these e-mail correspondences are not enough to hold that the parent company had rendered technical services/assistance to the assessee. It is pertinent to observe that before us, the assessee has also filed an application dated 24.09.2021 praying to admit certain evidences to establish the receipt of services from the parent company - we remit this issue also to the file of A.O./TPO for deciding afresh in accordance with law after considering all the evidences filed before us. Appeal of the assessee is allowed for statistical purpose.
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2024 (9) TMI 1623
Income deemed to accrue or arise in India - software licensing amounts to Fee for Included Services under Article 12(4)(b) of India-US DTAA or not? - scope of 'Make available clause - whether the professional service such as installation of software into customer system amount to Fee for Included Services under Article 12(4)(b) of India-US DTAA? - HELD THAT:- DR could not dispute that the issue with regard to software licensing is squarely covered by the order of the coordinate bench in which one of us i.e., Judicial Member was also on the Bench [ 2024 (9) TMI 1505 - ITAT DELHI ] assessee has only got the commercial information and not the technical know- how/technical expertise or the technologies on the basis of which it was prepared. For bringing any payment within the definition of fee for included services' the non- resident must make available the technical skill, expertise or technical know-how to the assessee, on the basis of which non-resident has prepared or developed the commercial information. Undisputedly in the instant case the technical skill, expertise or technical know-how used in preparing the commercial information was not made available to the assessee and hence the remittance made by the assessee for obtaining such commercial information cannot be called to be the 'fees for the included services to make it chargeable to tax in India. ' Make available clause is not satisfied, as erroneously held by the DRP We are of the considered view that clearly, these services are merely support services dealing with installation and integration and when the primary services themselves are not taxable as FTS, these ancillary services qua the primary services cannot be taxed as FTS. Reliance is rightly placed by Ld. AR on decision of TSYS Card Tech [ 2023 (4) TMI 1088 - ITAT DELHI ] and Net B.V [ 2017 (7) TMI 420 - ITAT DELHI ] wherein it is held that installation and integration services are support services and not taxable as FTS. Appeal of the assessee is allowed.
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2024 (9) TMI 1622
Jurisdiction to issue notice u/s. 143(2) - AR has submitted that the notice was issued by ACIT, Circle-5(1), Delhi who had no jurisdiction over the assessee - DR has submitted that the assessee has not challenged the jurisdiction of the AO within the time allowed u/s. 124(3) - HELD THAT:- From the perusal of the order of the Ld CIT(A) it is evident that the first notice was issued on 06-08-2013 by ACIT circle 5(1) which was within time. The case of the assessee was transferred to the jurisdictional assessing officer, who issued the second notice on 28-11-2014. The notice issued by the ACIT was not time barred. Grounds are decided accordingly. Assessee has submitted that the CIT(A) has erred and acted beyond jurisdiction - In the instant case the addition was sustained by changing the provision of the Act, without giving the show cause notice to the assessee which is the mandatory requirement under sub-section of section 251 of the Act. The Ld. CIT(A) has made the addition. Addition u/s 68/69C - In the instant case the CIT(A) has deleted the addition u/s. 68 of the Act and made the addition u/s 69 of the Act without giving the notice to the assessee. The books of account were never rejected by the AO. AO had not made any effort to verify the sundry creditors which details were provided by the assessee. The disallowance of corresponding purchase u/s 68 of the Act cannot be made when the assessee has disclosed the sales and purchases as well as gross profit, and which were accepted by the AO. CIT(A) has made the addition u/s 69 of the Act as the purchases were not made through banking channels. The books of account and audit report were accepted by the AO and entire alleged bogus transaction cannot be disallowed when the sales have been accepted. The assessee s gross profit rate was also increased 4.39% for the current year. Hence, the addition made by CIT(A) u/s 69C of the Act is liable to be deleted. From the above discussion, we are of the view that CIT(A) has wrongly made the addition u/s 69 of the Act. The addition made by the Ld. CIT(A) u/s.69C of the Act is deleted. Hence, the appeal of the assessee is liable to be allowed.
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2024 (9) TMI 1621
Revision u/s 263 - primary error found by the Ld. PCIT in the order passed by the AO was with regards to allowance of claim of exemption/ deduction u/s 54F which was claimed by the assessee on account of having invested long term capital gains earned in a new residential house - PCIT found the claim to be not allowable since he found the assessee to have contravened the provisions of the said section by owning more than one residential house property on the date of sale of original asset HELD THAT:- Incomes from residential houses held as stock in trade were not liable to tax under the head Income from house property in the impugned year i.e. A.Y 2015-16, and therefore did not qualify as residential house as per Section 54F. Assessee also pointed out that the provisions of Section 54F of the Act are incorporated in the chapter dealing with the computation of income under the head income from capital gains and it deals primarily with gains on sale of transfer of capital assets. That it provides exemption also on investment in capital assets. He further pointed out that the PCIT has given no basis whatsoever, nor any reasoning to arrive at the finding that even assets not qualifying as capital assets and being in the nature of stock in trade are to be considered for purposes of said section. We are in complete agreement with the ld. Counsel for the assessee on this account. PCIT has given no reasoning or basis for holding the Flat No. A/1.B1 located at Vastu Luxuria at Surat, admittedly held as stock in trade by the assessee, as being residential house for the purposes of section 54F - assessee has on the contrary demonstrated that, as per law applicable in the impugned year, assets held as stock in trade do not qualify as residential houses in terms of section 54F of the Act. There is, therefore, we hold, absence of a valid basis with the ld. PCIT for finding the property at Vastu Luxuria qualifying as residential house for the purpose of Section 54F of the Act. As for the agricultural land purchased by the assessee, the assessee s contention was that the houses constructed thereon were of very small sizes and for the purpose of carrying out agricultural activities alone and not for residential purposes. The basis with the ld. PCIT for finding the houses on the agricultural land to qualify as residential houses is that the local authorities have assessed the same to tax and they are equipped with electricity supply. How the fulfilment of these two conditions qualifies a house on agricultural land to be in the nature of residential house has not been elaborated by the ld. PCIT, nor clarified with reference to any law in this regard. It appears to have been found so by the ld. PCIT only on the basis of surmises, conjectures, whims and fancies, and without any basis at all. Therefore, we hold, that the PCIT s findings of the assessee being the owner of more than one residential house as on the date of sale of original asset is without any basis at all. His direction, therefore, to the AO to deny the assessee the claim of deduction u/s 54F is clearly not sustainable in law and the order passed by the ld. PCIT on this count is, therefore, directed to be set aside. As a corollary his direction to the AO to assess income from these properties under the Income from house Property is also not sustainable. PCIT has also directed the AO to deny the assessee any claim of deduction under Chapter VI A of the Act. In this regard, assessee drew our attention to the computation of income for the impugned year and pointed out therefrom that the assessee in first place had not claimed any deduction under Chapter VI A of the Act. He stated, therefore, that there was no occasion for denying any deduction to the assessee under Chapter VI A of the Act. DR was unable to controvert the above contention of the ld. Counsel for the assessee. In view of the same this direction of the ld. PCIT to the Assessing Officer to deny the assessee the benefit of deduction under Chapter VI A is also found to be without any substance and merit, and is set aside. The order of the PCIT passed u/s 263 of the Act is held to be not sustainable in the absence of a concrete finding of error in the order passed by the AO on all issues raised by the Ld. PCIT. The grounds raised by the assessee are allowed.
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2024 (9) TMI 1620
Reasonable time limit for issue of notice u/s 201(1)/201(1A) - HELD THAT:- It is pertinent to refer to the judgments of GE India Technology Centre GE India Technology Centre [ 2010 (9) TMI 7 - SUPREME COURT] and the judgment of Mahindra Mahindra Ltd. [ 2014 (7) TMI 265 - BOMBAY HIGH COURT] wherein it has been held that the reasonable time limit for issue of notice u/s 201(1)/201(1A) is 4 years. In cases, where the notice is issued beyond 4 years, the Co ordinate Bench of ITAT held that the same is barred by limitation u/s 201(1) of the Act passed in September 2021. Since, in the present case, the orders are beyond 4 years from end of financial year, hence not sustainable and is quashed. It is pathetic to note that the entire proceeding arose out of a survey under section 133A(2A) conducted on 09/12/2019, at the office premises, which is our firm opinion is belated and unsustainable and is hereby quashed. However, we are in full agreement with the contentions of assessee and the case laws relied upon by him are squarely applicable to the facts of the present case. Hence, insofar as non residents are concerned, the order to that extent is clearly time barred. There is a small credit of income to a resident, but the transaction did not crystalize. Assessee appeal allowed.
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2024 (9) TMI 1619
Rectification u/s 254 - Levy of interest u/s 234E - intimation of outstanding demand appealable order mentioned u/s 246A or not? - HELD THAT:- Where assessee denies his liability to be assessed under an intimation under sub-section (1) of section 143, he can file an appeal before the CIT(A). Further, the Tribunal while deleting the interest levied u/s 234E of the Act has relied on various decisions of Hon ble High Courts. We find the Hon'ble Supreme Court in the case of CIT vs. Reliance Telecom Limited. [ 2021 (12) TMI 211 - SUPREME COURT] while deciding the powers of the Tribunal u/s 254(2). In view of the above decision of the Hon'ble Supreme Court in the case of CIT vs. Reliance Telecom Limited cited [ 2021 (12) TMI 211 - SUPREME COURT] the only course available to the Revenue is to approach the higher forum against the order of the Tribunal. Three Miscellaneous Applications filed by the Revenue are dismissed.
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2024 (9) TMI 1618
Second Rectification application u/s 254 - First Misc. Application has been considered rejected - Validation of payments made towards ESI and EPF within due dates - HELD THAT:- During the course of hearing the assessee vehemently contended that the assessee had submitted the challans for the payment of ESI and EPF at the time of hearing but we found that except 3CB 3CD Report Salary Paid Ledger nothing is available on record therefore the plea of the AR of the Assessee that the issue may be remanded for the limited purpose of verifying the challans submitted at the time of hearing of the appeal on 17.04.2024 so as to render substantial justice cannot be accepted. We also found that this Misc. Application although filed within 6 months from the end of the month in which the order was passed but the assessee has raised the same ground as that of the first Misc Application. Since we have already adjudicated the same while passing Order in first MA the grounds once again raised in the present M.A is not maintainable. As relying on Smt. Vasantben H. Sheth [ 2014 (8) TMI 487 - GUJARAT HIGH COURT] we cannot entertain the second Misc. Application again on the same Grounds when once the First Misc. Application has been considered rejected by us. We reiterate that the AO shall pass the consequential Order in compliance with Order of the Tribunal in the case of Manikandan Vazhukkapara Kumaran [ 2023 (11) TMI 1294 - ITAT BANGALORE] .
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Customs
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2024 (9) TMI 1617
Seeking quashing of seizure order - Dried Areca Nuts contained in 352 bags - inter state transportation - Section 110 of the Customs Act - reasons to believe - HELD THAT:- Reason to believe is the most significant safeguard available to the authorising officer to conduct search. The phrase is made up of two words reason means cause and believe means to accept as true or have faith in it. The reason to believe word has been interpreted by the Hon ble Supreme Court in the case of N. Nagendar Rao and Company [ 1994 (9) TMI 316 - SUPREME COURT] that even though formation of opinion may be subjective but It must be based on material on the record. It cannot be arbitrary, capricious or whimsical. Reason to believe cannot be a rubber stamping of the opinion already formed by a competent officer. The Officer who is supposed to write down his minimum reasons to believe has to be independently apply his mind. It should not be a mechanical reproduction of the words in the statute. When an officer exercising quasi judicial function, such a decision peruses such reasons to believe. It must be apparent to the reviewing authority that the officer penning the reasons has applied his mind to the material information available on record and has, on that material, arrived at his reasons to believe. Application of mind to the officer must be discernible. In the case of Sabh Infrastructure vs. Assistant Commissioner of Income Tax [ 2017 (9) TMI 1589 - DELHI HIGH COURT] , the Delhi High Court specifically held that it is also now well settled that the reasons to believe have to be self explanatory. The reasons cannot be, thereafter, supported by any extraneous material. Suspected opinion of the local traders that seized dried Areca Nuts is a foreign origin is not reliable and acceptable, in other words, with a naked eye one cannot draw inference that whether it is Indian origin or foreign origin. In the present case, admittedly, the goods were seized at Forbishganj and not seized from any port or any customs area to form a believe that the goods were being imported into India. The Ministry of Agriculture and Farmer Welfare as well as ICAR were of the view that there is no mechanism available to trace the country of origin of Areca Nuts and there is no laboratory test available for the same and further on the basis of examination by naked eye, it cannot be conclusive determined with regard to origin of the Areca Nuts - The opinion of the local traders that seized Areca Nuts suspected to be foreign origin failed the test Wednesbury Principles as no reasonable person can reach the conclusion of country of origin of Areca Nuts by mere perusal from naked eye as well as the opinion of the local traders. Some ways to assess the quality of Areca Nuts like glossy appearance, Kernel colour, fiber characteristics, texture, grading, moisture contents, weight etc., are needed. Recording of reasons in support of the conclusions arrived at in a judgment or order by the Courts in our judicial system has been recognized since the very inception of the system. Right to know the reasons for the decisions made by the Judges is an indispensable right of a litigant. Even a brief recording of reasoned opinion justifying the decision made would suffice to withstand the test of a reasoned order or judgment. A non-speaking, unreasoned or cryptic order passed or judgment delivered without taking into account the relevant facts, evidence available and the law attracted thereto has always been looked at negatively and judicially de-recognized by the courts. The petitioner has made out a case so as to interfere with the impugned seizure memo dated 02.04.2024 and the same is set aside. Consequently, bank guarantee is discharged and the bond furnished by the petitioner to secure provisional release of the seized goods within a period of three months from the date of receipt of copy of this order. Petition allowed.
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2024 (9) TMI 1616
100% EOU - clandestine clearance of the short found goods - no corroborative evidences or not - recovery of customs duty and penalties - HELD THAT:- It is found that no corroborative evidence has been relied upon by the Revenue regarding the clandestine clearance of the short found goods from the factory premises of the appellant and also no investigation has been made by the department from the transporter and the buyer to whom such goods were alleged to be sold by the appellant. The burden of proof is on the revenue to establish their case beyond doubts and it is required to be discharged effectively and also the allegation of clandestine removal solely made on the basis of statement of the director without any corroborative evidence is not sustainable as held in the case of M/S. VIKRAM CEMENT (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [ 2012 (11) TMI 777 - CESTAT NEW DELHI ]. The said decision was confirmed by the Hon ble Allahabad High Court in the case of COMMISSIONER VERSUS SUNIL KUMAR GUPTA [ 2013 (11) TMI 1557 - ALLAHABAD HIGH COURT ]. Admittedly, nothing has been brought on record with corroborative evidence to allege clandestine removal against the appellant. Therefore we are of the view that demand against appellant is not maintainable by simply relying upon the statement of Shri Vijyendra Kanhaiyalal Arya, director of the Appellant who has also not been cross examined as mandated under section 9D of the Central Excise Act, 1944. It is found that neither investigation has been made by the department from the agent Shri Nathabhai Agrawal and Abhishek Market, Ring Road, Surat through whom goods were alleged to be cleared by the appellant and nor their statements were recorded by the department to establish their case. Further the onus has to be discharged by the Revenue with the production of sufficient evidence which may lead to the probability of having removed the goods as held in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. ABS METALS (P) LTD. [ 2016 (9) TMI 940 - CESTAT NEW DELHI ]. There are no merit in the impugned order - the impugned order is set aside - appeal allowed.
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2024 (9) TMI 1615
Revocation of Customs Broker license of the appellant - forefeiture of entire security deposit - Regulation 19(1) of CBLR 2013 - HELD THAT:- The SCN issued is dated 25.11.2013 upon the filing of the Bill of Entry dated 21.11.2012. Order of suspension of License is dated 15.01.2014, the inquiry report is dated 22.05.2014; the SCN under CBLR is dated 25.02.2014. Finally, the order of revocation dated 12.02.2015 came to be passed by the Commissioner. Going by the dates, it is tending to agree with the assertions of the ld. Advocate that the order of suspension of license has been passed after the expiry of the prescribed period of limitation and hence, the suspension order is clearly in violation of Regulation 20(2) ibid. But what is challenged is the order of Revocation dated 12.02.2015 and hence, the legality or the correctness of an order dated 15.01.2014 cannot be decided now. There are gravity of the alleged offence, if at all committed by the appellant does not call for capital punishment resulting in the very suspension of his Customs Broker License. The same, according, is also highly disproportionate. Initially, the order of suspension of license was passed in 2014, thereafter the impugned order was passed in the year 2015 and since then, the appellant is out of business which is perhaps its only source of income. The appellant must have suffered enough financially which itself is a deterrent factor and hence, to fasten the appellant with a permanent sealing down of its customs broker license may not be called for since the consequences of revocation are very serious since, apart from the members of own family, there may be employees and the members of their family who would be dependent for their sustenance/survival. It would meet the ends of justice, if it is ordered for re-issuance of its Customs Brokers License subject to fulfilment of the prescribed procedural requirements, but however, it is not proposed to interfere with impugned order insofar as the forfeiture of security deposit is concerned. The appeal is partly allowed.
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2024 (9) TMI 1614
Demand of Customs duty in respect of goods destroyed while there were warehoused - seeking to demand interest and penalty in terms of the Warehousing (Custody and Handling of Goods) Regulation 2016 - impugned order passed without any jurisdiction and any authority of law - HELD THAT:- The appellants are a custom warehousing station where goods are stored by importers/ exporter before they are exported or cleared from the bonded warehouse. There was a fire in the warehouse resulting in loss of certain goods. The custom duty amount on the goods lost came to Rs. 2,76,52,609/- which was paid by the appellants. The proceedings in the instant case are for recovery of interest on the said amount amounting to Rs. 93,43,881/-. The first question raised by the appellant is if such loss/ destruction can be treated as removal in terms of Section 71 and 73A of the Customs Act, 1962. It is opined that the removal in terms of Section 71 or section 73A does not include destruction of goods by way of fire or any other reason. There is no provision in the act or regulations to treat such destruction/ loss on account of fire, is deemed removal. In these circumstances, it is opined that no liability to pay duty or interest would arise under Section 71/73A of the Customs Act, 1962 as in the instant case as there was no illicit physical removal of warehoused goods from the warehouse. The lower authorities have also sought to invoke regulation 4(c) of the Custom Warehousing Regulation, 2016. The said regulation provide for the warehouse keeper to give an undertaking indemnifying the Principal Commissioner of Customs or Commissioner of Customs, as the case may be from any loss arising on account of loss suffered in respect of warehoused goods due to accident, damage, destruction, deterioration or any other unnatural cause during the receipt, delivery, storage despite or handling. It is seen that the said undertaking is to protect the Commissioner of Customs from any liability arising on account of such laws suffered in respect of warehoused goods - In the instant case, the Commissioner has not shown any liability arising on account of such goods. There is no liability of customs duty or interest on the Commissioner of Customs and therefore invocation of clause (c) of Regulation 4 is not warranted in the facts of the case. Section 73A applies only when the goods are physically removed from the warehouse improperly. Any loss arising on account of fire or any other natural cause cannot be treated as removal in terms of Section 73A and therefore, the provisions of clause (b) of Regulation 4 are also not applicable to the instant case - it is apparent that provisions of Section 73A cannot be invoked to recover duty or interest or impose penalty in case where there is loss on account of fire within a bonded warehouse. The impugned order therefore cannot be sustained and is set aside - The appeal is consequently allowed.
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Corporate Laws
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2024 (9) TMI 1613
Seeking approval of the Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulation - HELD THAT:- All the requirements of Section 30(2) are fulfilled and no provision of law for the time being in force appears to have been contravened. Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. section 31 of the Code deals with the approval of the Resolution Plan by the Authority if it is satisfied that the Resolution Plan as approved by the CoC under section 30(4) meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan as approved by the CoC meets the requirements. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and the Regulations 37, 38, 38(1A) and 39(4) of the CIRP Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The Application is allowed and the Resolution Plan submitted by Mr. Harry Dhaul is hereby approved.
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2024 (9) TMI 1612
Oppression and mismanagement - Illegal sale of land of the Company - illegal allotment of 17,29,000 equity shares - illegal appointment of Respondent No.4 as Director of the Company - illegal eemoval of Petitioner No.1 as Director - correctness of Amendment of Memorandum and Articles of Association - legality of Extra-ordinary General Meetings held and resolutions passed - Recovery of syphoned money with interest. Whether the acts or conduct of respondents are prejudicial and oppressive to the petitioners or /and whether the affairs of the Company are being conducted in a manner prejudicial to the interests of the Company as alleged by the petitioners? - HELD THAT:- In view of the written and oral submission made by both the parties and after perusal of the records as mentioned, the petitioner has not pointed out any irregularity in the process of sale and the main contention of the petitioner is about the valuation of the land. The Petitioners have failed to point out any irregularity in the sale of land assets but for the price at which they are sold. As far as the issue of selling properties at lower than market value is concerned, there are no illegality in it since the stamp duty has been paid at applicable valuation and rates. However, the moot question before us is whether this act of selling land at a price lower than the market rate is an act of oppression and mismanagement. Thus it is a common practice that many companies/ individuals take conscious decisions to sell property at a price lower than the market value in view of exigencies and other factors. It is clear from the facts produced before us that Company was in urgent need of funds at that point of time - keeping in view that consent of Petitioner no 1 was also there in fixing the cut off sale price, there are no act of oppression and mismanagement for selling the land parcels at a price lower than market price. Therefore, keeping in view the aforesaid facts, there are no act of oppression and mismanagement in the sale of two land parcels as aforesaid by the Company to Respondent No.29. There are merit in the submissions made by respondents that though lease deed was signed to lease out the company to Messrs Padmavatahi Ispat but it was never put into action and ultimately the said lease deed was cancelled and advance lease rent was returned to lessee, therefore this can not be an act of oppression and mismanagement. The acts or conduct of respondents are not prejudicial and oppressive to the petitioners and affairs of the Company are also not being conducted in a manner prejudicial to the interests of the Company. Whether the alleged allotment of 17,29,000 equity shares made on 19th May 2008, 10th September 2008 and 13th October 2008 to the respondents is illegal and void ab initio and thus necessitate the need for rectification of Register of Members? - HELD THAT:- The alleged allotment of 17,29,000 equity shares made on 19th May 2008, 10th September 2008 and 13 th October 2008 to the respondents is not illegal and void ab initio and thus does not necessitate any need for rectification of Register of Members. The present petition being devoid of any merit or substance is liable to be dismissed - petition dismissed.
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2024 (9) TMI 1611
Oppression and mismanagement of the Company - Issuing notice of EGM dated 01.10.2022 for the meeting to be held on 11.10.2022 - Removal of Petitioners as Directors and further of Petitioner No. 1 as Managing Director - HELD THAT:- Section 242 places a heavier burden on the complainant as he is required to prove that the affairs of the company are oppressive and prejudicial to any member or the interests of the company - The alleged acts of oppression are linked to the EGM dated 11.10.2022. The Companies Act, 2013 lays down procedure as how the meeting is to be convened. As far as removal of directors of the Company other than one appointed by Tribunal under section 169(1) of the Companies Act, 2013, simple majority is enough. In respect of notice for removal of director and appointment of new director in place of removed director, special notice is required to be issued under section 169(2) of the Companies Act 2013. The Petitioners as per their own admission came to know about the said notice on 04.10.2022, which fulfills the requirements of law. Even otherwise, they were having knowledge of the EGM even prior to the said date and perusal of Annexure A-4 filed by the Petitioners reveals that the said notice was issued after complying with all the legal requirements. The stand of Petitioners that no such meeting was held on 11.10.2022 is without any basis as transpired from the record. The meeting was attended by five directors and this record was filed with the RoC. In the circumstances, there is no flaw in sending the notice of the meeting after complying all the requirements of law. The decision of shareholders in the matter of appointing or removing the directors of the Company from the Board cannot be a subject matter of judicial scrutiny since the right to appoint or remove directors is supreme as a part of corporate democracy. It is emphasized that any inconvenience caused to the opposing party during the legal process will not negate the validity of the legal actions taken. Consequently, although the removal of the Petitioners from their directorial positions may be discomforting for them, the decision of the majority will prevail. From this standpoint, the removal of the Petitioners from the directorial posts does not amount to an act of oppression or prejudice against them. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as members and this require that events have to be considered not in isolation but as a part of a consecutive story. There must be continuous acts on the part of the majority shareholders, continuing up to the date of the petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members. The conduct must be burdensome, harsh and wrongful and mere lack of confidence between the majority shareholders and the minority shareholders would not be enough unless lack of confidence springs from oppression of the minority by a majority in the management of the company's affairs, and such oppression must involve at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder. As far as the act of mismanagement by Respondents, if any, in removing Petitioners from the position of directors of the Company is to be considered in light of Section 241(1)(b) as there is a change in the management of the Company resulting from such removal of Petitioners as Directors. The phrase affairs of the company are being conducted in section 241 indicates a continuous wrong. It means that because of the change in the management of company, there is a likelihood that the affairs of the company will be conducted in a manner prejudicial to the interests of the company or members. Petitioners failed to show any act done by the management or the apprehension that the affairs of the Company in future are likely to be conducted in a prejudicial manner as a result of the removal of Petitioners from the position as directors. Thus, in the absence of proof of oppression or mismanagement as alleged by Petitioners, this Tribunal finds no merit in the Petition to grant the reliefs as prayed for and hence, the present Petition is liable to be dismissed.
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2024 (9) TMI 1610
Seeking direction to appoint an Inspector to carry out the Investigation into the affairs of the Respondent Companies in terms of the Section 213 (b) of the Companies Act, 2013 - fraud under Section 447 of the Companies Act, 2013 - HELD THAT:- The present Petition has been filed under sub-section (b) of Section 213 of the Companies Act, 2013 and as per the said Section the Petitioner is required to satisfy this Tribunal that there are circumstances suggesting that the business of the Respondent companies is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose. The issue raised by Supertech does not warrant any intervention by RBI. Even otherwise, the issue essentially is a matter of reconciliation of accounts between lender-borrower and to be dealt with as per the grievance redressal mechanisms in place. However, Indiabulls is advised to complete the adjustment of Rs. 9.75 crore mentioned above and inform the position to Supertech with in 15 days of receipt of this order. The averments made in the Petition by the Petitioners are not supported by any material documents in order to substantiate such allegations. The documents filed by the Petitioner along with the Petition would show that the allegations made by the Petitioner are not corroborated with the documents filed therewith. Prima facie, the Petitioner has miserably failed to make out a case under Section 213(b) of the Companies Act, 2013 and also failed to satisfy this Tribunal that the affairs of the Respondent Company have been conducted in a fraudulent manner or unlawful purpose and on the said count itself this Petition is liable to be dismissed. On the perusal of the documents submitted by the Petitioner and the in view of the discussion made, the Petition as filed by the Petitioner under Section 213 of the Companies Act, 2013 stands dismissed in limine.
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2024 (9) TMI 1609
Maintainability of the company petition under Section 399 of the Companies Act, 1956 - pre-condition envisaged under sub sections (1) and (3) of section 399 of the Companies Act, 1956 satisfied or not - amendments made to the Articles of Association and the declarations filed before Registrar of Companies, by the respondents were prejudicial to the interests of public, the 1st respondent company, and the petitioner or not - oppression and mismanagement. Whether the Petitioners have satisfied the condition precedent envisaged under subsections 1 3 of section 399 of the Companies Act, 1956? If the answer is no, whether the company petition is maintainable? - HELD THAT:- Though there appears to be some controversy as to whether compliance of sub-section (a) of Section 399 which states that not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less or any members or members holding not less than one-tenth of the issued share capital of the company, is mandatory or directory, in so far as the essential test that determines the eligibility in terms of sub-section (a) of section 399 of the Companies Act, 1956 is concerned, there is no ambiguity. In the instant case, the petitioners even while contending that they have 1/10th share of the issued share capital of the Company at the time of filing the company petition, also on 20.03.2023 have filed the consent affidavits of 4 shareholders of the 1st respondent, namely, Mrs. Alka Sanghi, Aarthi Sanghi, Gaurav Sanghi and Aashish Sanghi, which were merely taken on record subject to the objection if any of the respondents but not under the liberty/direction dated 14/03/2023 of this Tribunal, as contented by the petitioners in their written submission - the purpose behind the consent affidavits is to overcome the pre-condition under Sub- clause (a) of Section 399. The language, in sub-section 3 of section 399, having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them , engaged by the Legislature, makes it abundantly clear that the written consent is a condition precedent for maintaining a petition under section 397 of the Companies Act 1956. An affidavit filed after lapse of 15 years, that too at the far end of the proceedings even accepting that filing of the consent letters is not mandatory does not satisfy the test and hence it is overwhelmingly clear that here is a case of non-filing of written consent as contemplated under Sub-section (3) of Section 399 of the Act, Hence, the sub-section (3) of Section 399 of the Act, remains unsatisfied. Whether amendments made to the Articles of Association and the declarations filed before Registrar of Companies, by the respondents were prejudicial to the interests of public, the 1st respondent company, and the petitioner, amounting to the acts of oppression and mismanagement? - HELD THAT:- Merely by stating that only upon perusal of the annual return for the financial year ending 2007, the petitioners gained knowledge of the alleged illegal transfer of shares, especially when it is not the case of the petitioners that the Annual Reports of the 1st respondent were not uploaded in the MCA web site as required under the statute, the Petitioners cannot get over the bar of limitation, as once the returns are uploaded in the MCA web portal, which is in the public domain, the same constitutes notice to public especially to all the directors and members of the company. None of the allegations as made in the petition either survive the law of limitation or constitute the acts of oppression and mismanagement. Therefore, petition is thoroughly misconceived. Petition dismissed.
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Insolvency & Bankruptcy
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2024 (9) TMI 1608
Admission of Section 7 application filed by the Respondent No.1 - initiation of CIRP - Financial debt - whether the Appellant had a financial debt qua Respondent No.1 which had become due and payable and whether there was an incidence of default thereof? - Time limitation - HELD THAT:- In the instant matter, whether on factorising the part payment against the loan on 01.05.2021 or taking into account the email of the Appellant of 11.05.2022 wherein the outstanding debt under the Facility Agreement and Supplementary Facility Agreement has been acknowledged, the present application having being filed within three years from the date of acknowledgement of the debt, it cannot be held to be barred by time. Whether Corporate Debtor was required to be given time to regularise its loan account in terms of RBI circular before declaring the account of the Corporate Debtor to be NPA under the SARFAESI Act? - HELD THAT:- There are not much substance in the contention of the Appellant that they were denied adequate opportunity to regularise their loan account. Respondent No.1 on 24.02.2020 vide their letter had accepted to regularise the loan account of the Corporate Debtor subject to payment of an amount of Rs 2.38 Cr. towards the over-due debt on or before 15.03.2020. It is also found that in response to this letter, the Corporate Debtor deposited Rs 1 Cr. in two tranches but failed to pay the balance amount as assured by 15.03.2020 to regularise the loan account. Furthermore, declaration of account as NPA under the SARFAESI Act is an independent proceeding and cannot be adopted as a defence to obstruct the Financial Creditor from proceeding under IBC to initiate CIRP against the Corporate Debtor. Existence of key ingredient of Section 5(8) of the IBC of disbursement of loan against consideration for time value of money by the Financial Creditor qua the Corporate Debtor or not - HELD THAT:- In the instant case, the Sanction Letter clearly provides that 15% p.a. floating interest linked to Long Term Reference Rate of the Financial Creditor was applicable. The loan facility having been extended by Respondent No.1 being interest-bearing, this disbursement squarely falls within the purview of Section 5(8)(a) of the IBC and has all the trappings of a financial debt. There are no force in the contention of the Appellant that the disbursal of funds by the Respondent No.1 was without consideration for time value of money. The acknowledgment of debt in the present facts of the case is therefore clear and unambiguous and nothing on record controverts the position that there was a default in repayment. That being the case, there arises no doubt in our minds that there was a debt on the part of the Primary Borrower and the Co-Borrowers qua the Financial Creditor which remained unpaid. The obligation of the Co-Borrower is coextensive and coterminous with that of the Primary Borrower and hence a right or cause of action becomes available to the financial creditor to proceed against the primary borrower, as well as the Co-Borrower in equal measure in case they commit default in repayment of the amount of debt. Since in the facts of the present case, a debt has arisen which is due and payable by the Corporate Debtor and a default has occurred, the Respondent No. 1 was entitled to file the Section 7 application - Section 7 application filed by the Financial Creditor was not barred by time and the debt and default being proven, the Adjudicating Authority did not commit any error in admitting the Section 7 application. There are no error in the judgement of the Adjudicating Authority admitting the Section 7 application. There is no merit in the Appeal - appeal dismissed.
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2024 (9) TMI 1607
Maintainability of application filed u/s 7 of Insolvency and Bankruptcy Code, 2016 - existence of financial debt or not - Bar under Section 10A of the IBC - Record of Default - Stamping of Loan Agreement - Authorization to Submit the Application. Existence of financial debt or not - HELD THAT:- There were a number of adjournments on the ground of some kind of settlement between the parties. Moreover, Ld. Counsel for the Corporate Debtor has even mentioned that the they have already made the part payment and the next installment will be paid by 25.09.2023. Admission of part payments towards loan repayment and further promise to pay next instalment by 25.09.2023 amounts to acknowledgement of existing financial debt - the first defense of the Corporate Debtor that there is no existence of financial debt is rejected. Bar under Section 10A of the IBC - HELD THAT:- According to the Repayment Schedule, 1st EMI instalment of Rs. 5,70,00,000/- became payable on 05.01.2021. It is submitted that this instalment was paid by the Corporate Debtor on various occasions till 02.04.2021. Thereafter, 2nd EMI instalment of Rs. 34,20,00,000/- became payable on 05.04.2021. Part Payments were made for this end EMI till 21.06.2021. The 3rd EMI became payable on 05.07.2021 which the Corporate Debtor failed to honour. During the hearing of the matter, this aspect has not been denied by the Corporate Debtor. Thus, the default has occurred on 05.07.2021 and is clearly not barred under Section 10 A of IBC. Record of Default - Claim is neither based on the record of default recorded with the Information Utility nor based on any other record or evidence demonstrating default as per Regulation 2A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- Admittedly, the financial creditor has not annexed record of default recorded with IU nor any evidence as specified under Regulation 2A. However, financial creditor has annexed the loan sanction letter dated 03.06.2020, loan agreement dated 03.06.2020 duly executed by the Corporate Debtor co-borrower, statement of account evidencing the disbursement of Rs. 190 crores on 23.06.2020 through RTGS No. PID0010824 copy of notice dated 20.01.2022 issued under section 13(2) of SARFAESI Act, 2002, revised payment of schedule dated 12.10.2022 - these documents constitute such other record as required under section 7(3)(a) of the Code. Corporate Debtor has not denied any of the above record, rather had submitted before this Court that part payment of loan has already been made and that next instalment would be paid on 25.09.2023. Therefore, this contention of the Corporate Debtor is also rejected. Stamping of Loan Agreement - HELD THAT:- In view of the fact that existence of debt and default has been established, default amount is more than threshold limit of Rs. 1 crore, the contention of mentioning different amount in the notice and in the part IV of the petition is inconsequential. Even then on examining the petition and found that the complete break-up is provided in the Foreclosure Statement at Annex.5 of the Company Petition and the amount mentioned therein does tally with the amounts mentioned in Part IV of the petition. Therefore, this contention of the Corporate Debtor is also rejected. Authorization to Submit the Application - Whether signatory to the petition is not authorized to initiate specific proceedings under IBC? - HELD THAT:- It is observed that the Board Resolution at Annexure 8 clearly states that Mr. Uttam Kumar is authorised on behalf of Indiabulls Housing Finance Limited to appear for and/or represent the Petitioner before the National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT) or such other authorities/forums/courts for the cases pertaining to the Code. We are satisfied that petition has been lawfully initiated on the strength of the board Resolution 14.08.2020. Therefore, this contention of the Corporate Debtor is also rejected. Thus, the Petitioner has proved the debt and default and the same was also admitted during the hearing of this petition by the Corporate Debtor. The default is to the tune of Rs. 260 Crores (which is much above the threshold of Rs.1 Crore). We are of the considered view that the Financial Creditor has proved existence of debt and default. Further the debt is in excess of Rs. 1 Crore and thus above the threshold limit mandated in Section 4(1) of the Code. Also the Petition filed is within limitation. Therefore, this company petition is admitted and also looking at the consent given by the Insolvency Professional, Mr. Ravi Prakash Ganti appointed as an IRP, with a direction to the Financial Creditor to pay remuneration to the IRP and his expenses until the constitution of CoC. Petition allowed.
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2024 (9) TMI 1606
Maintainability of application filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 - guarantee was not invoked against the applicant for recovery of the amount - Petitioner has not produced and has suppressed from this Tribunal regarding the cases filed by the Respondent under Negotiable Instrument Act - HELD THAT:- The Demand Notice dated 07.03.2018, which is the basis of the default as claimed by the Appellant has been filed along with Application. The notice is addressed to Rutika Creation Pvt. Ltd, the Corporate Debtor and Kiran Sanjaybhai Kanani, the other guarantor but not to the applicant. Therefore, the guarantee was not invoked by the Kotak Mahindra Bank vide demand notice dated 07.03.2018 against this applicant. Apart from this document, the applicant has not produced or placed any other document to show that guarantee was invoked against the applicant for the recovery of the amount. This application is dismissed for filing an application being a co borrower cum guarantor in which there are certain details not revealed or attached. This application is appears to be filed to escape from the action initiated by financial creditor. Since he appears to have signed the loan as director cum guarantor, the personal insolvency on the grounds of this default cannot be filed under Sec 94 of IBC. Further the loan agreement clause 11.6 restricts default only to arbitration. It is not agreed that the report submitted by the RP that the present application is maintainable as the guarantee has not been invoked in respect of the applicant. The report of the RP is found to be not satisfactory in examining the eligibility of the borrower to file under Sec 94 of IBC. In sequel to the above, the present application is not maintainable. Petition dismissed.
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2024 (9) TMI 1605
Initiation of Insolvency Resolution Process against the Applicant/Debtor who is the Personal Guarantor of M/s. Sarthak Creation Private Limited - grounds for admission of the application recorded in the Report is that the Personal Guarantor admit its liability therefore Insolvency Resolution Process can be initiated - HELD THAT:- This application has not enclosed the relevant documents of demand notice of invocation and the notice under SARFESI Act. The application is barred by limitation period in preferring the application within the relevant period considering the date of NPA and demand notice of Bank of Baroda stated to have been issued on 19.11.2015. Petition dismissed.
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2024 (9) TMI 1604
Seeking direction to set aside the sale notice dated 19.07.2023 issued by the liquidator in respect of Haldia property - seeking to set aside the communication dated 14.07.2023 sent by the liquidator any consequential action taken by the liquidator in respect of Haldia property and to direct the liquidator not to interfere in respect of Haldia property. Where the amount payable by the secured creditor under sub- Regulation (2) (a), is not certain, whether liquidator is mandated to inform the secured creditor the estimated amount? - If liquidator has not informed the estimated amount, whether provision of sub-Regulation (3) would apply or not? - Whether first proviso is an exception to sub-Regulation (2) which mandates the secured creditor to pay the amount within 90 days? HELD THAT:- It is a settled law that while interpreting a statute, courts have to see the intention of the legislature. Further, when the words of an Act or Regulations are clear and unambiguous, courts are bound to give effect to those words. The language of Regulation 21A is plain and simple. It cast a duty on the secured creditor who proceeds to realise its security interest, it has to pay the liquidator either an amount referred to in sub-Regulation (2)(a), or an amount referred to in first proviso. Failing which, the asset shall become part of the liquidation estate as mentioned in Regulation 21A(3). As per the Regulation 21A(1) a secured creditor is required to inform the liquidator about its decision to relinquish security interest to the liquidation estate or to realize its security interest; the said decision is to be communicated within 30 days from the liquidation commencement date failing which the assets covered under the security interest are presumed to be part of the liquidation estate. Accordingly, 30 days expired on 15.04.2021 and the remaining part of the Haldia Property admeasuring 8.04 acres became part of the liquidation estate. However, the applicant through its revised Form-D dated 28.01.2023 had for the first time claimed its security interest over remaining 8.04 acres of the property. The plea of the applicant that since the estimate was not given by the liquidator and therefore, Regulation 21A is not applicable on it is quite misplaced. Rather the issue of estimate would arise only when the applicant had realized the security interest and inquired the liquidator about the proportionate amount payable by him, however no such steps were ever taken by the applicant. Therefore, the interpretation made by the applicant is not acceptable at all. The law is very clear that the secured creditor has to realise and pay the CIRP cost with in 90 days and also to pay the excess realized value of the asset, if any, within 180 days. Thus the applicant had to complete the entire process within 180 days itself, failing which the entire subject property would form part of liquidation estate as per Regulation 21A(3) of the IBBI (Liquidation Process) Regulations, 2016. As far as claim of the applicant for 8.04 acres is considered we are of the view that the same should also have been communicated with in 30 days from the date of the liquidation commencement order, failing which Regulation 21A(3) would apply and the said part of the property will form part of the liquidation estate. The applicant failed to comply with the requirements of the Regulation and therefore, the decision of the liquidator that the entire property forms part of the liquidation estate is not contrary to law. Application dismissed.
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PMLA
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2024 (9) TMI 1603
Seeking withdrawal of SLP - HELD THAT:- The Directorate of Enforcement does not want to press these petitions, and he may be permitted to withdraw the same. The Special Leave Petitions are, accordingly, dismissed as withdrawn.
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2024 (9) TMI 1602
Money Laundering - proceeds of crime - Legality of petitioner's arrest - illegal mining - HELD THAT:- A bare perusal of the grounds of arrest as well as reasons to believe reveals that the entire case of E.D is based on illegal mining by fabricating e-rawana bills. In first eight FIRs, petitioner was not an accused. In 9th FIR also, he has not been named; rather E.D has tried to implicate him on the premise that he is the Director of DSPL, but there is no material to substantiate that petitioner is either the Director of said company; or a person in-charge of the affairs of the company; rather the information obtained from the website of Ministry of Corporate Affairs clearly indicates that petitioner ceased to be the Director of DSPL w.e.f. 07.11.2013. It is specifically observed that E.D has not placed on record any material to the contrary in this regard. Although, E.D tried to justify the arrest on the premise that petitioner is a beneficiary of the syndicate running illegal mining as well as of G.M. Co., but again there is no material to substantiate that petitioner is having any relationship and/or concern as Director, Promoter or share-holder of the so-called G.M. Co. Even, the E.D has failed to show that such a company is in existence and/or registered with the Registrar of Companies; or there is any such legal entity in operation under any law? As on today, prima facie, there is no material with the E.D to substantiate that petitioner has directly or indirectly, indulged in any process or activity connected with the proceeds of crime, in any manner whatsoever and/or projected the same as untainted by any means; hence there was/is no reason to believe; nor any ground of arrest is made out against him on the premise that petitioner is guilty of an offence under the PMLA. The petitioner has not been found involved in any illegal activity, in any manner whatsoever, attracting the offence of money laundering under PMLA - there is no option, except to allow the petition - the petitioner be released forthwith, if not required in any other case - Petition allowed.
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Service Tax
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2024 (9) TMI 1601
Levy of service tax - Business Auxiliary Services or not - Software Activation Charges - whole case has been made by the Department on the basis of balance sheet which shows a separate income under head software activation charges - time limitation - low tax effect by bearing in mind Circular dated 06.08.2024 issued by Ministry of Finance, Government of India - it was held by CESTAT that 'the amount collected by the Appellant from their customers against as activation charges of equipment/ software features are covered under the activity of sales of goods and not covered under the provisions of Service as defined in the Act.' HELD THAT:- The civil appeal is dismissed owing to low tax effect.
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2024 (9) TMI 1600
Interpretation of N/N. 30/2012-S.T. dated 20.06.2012 and N/N. 45/2012-S.T. dated 07.08.2012 - reverse charge mechanism with regard to the services provided by a director of a company to the body corporate or the said company - service tax on rent paid by a company to its directors who own the leased building - HELD THAT:- As per undisputed facts of the case directors who own the immovable property has given on rent to the appellant company and the appellant company has paid the rent for the rental premises to the director. This activity is nothing to do with the relationship of the directors with the company as director. As per the entry 5A of the notification dated 07.08.2012, it is clear that only those services which are provided by the director to the company in the capacity of directors are covered under service tax liability under reverse charge mechanism on the service recipient. For example the director is paid director fees, seating fees etc. the same will be covered under reverse charge mechanism and the company is liable to pay the service tax whereas in the present case there is no such payment involved. The payment which was sought to be taxed by the Revenue is rent of immovable property which is in individual capacity and not in the capacity of the director. This issue is no longer res-integra as the same has been decided by this Tribunal in M/S CORDS CABLE INDUSTRIES LIMITED VERSUS COMMISSIONER, CENTRAL EXCISE, JAIPUR (RAJASTHAN) [ 2023 (4) TMI 441 - CESTAT NEW DELHI] wherein it was held that 'The premises which were let out to the appellant are owned by Naveen Sawhney and D.K. Prashar in their individual capacity and it is not the case of the department that the properties were owned by them as Directors of the appellant. In such a situation, rent was collected by them in their individual capacity and merely because they also happen to be the Directors of the appellant would not mean that they had collected rent as Directors of the appellant.' From the above decision of the Principal Bench of this Tribunal, the issue and facts involved is absolutely identical to the facts of the present case. Therefore the ratio of the above decision is directly applicable to the present case. The issue is no longer res-integra - the impugned order is set aside. The appeal is allowed.
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2024 (9) TMI 1599
Confirmation of demand of service tax, interest and imposition of penalties - classification of service under the category of Business Auxiliary Service, Erection Commissioning and Installation service and Management Maintenance or Repair service - services provided during the period 2006-07 to 2010-2011 - Circular No. 12305/2010-ST dated 24.05.2010 - HELD THAT:- The appellants are engaged in providing various services which they claim are in the nature of services which are exempted in terms of Circular No. 12305/2010 dated 24.05.2010 and Notification No. 11/2010 dated 27.10.2010. The benefit of the said circular and Notification as essentially being denied by the Commissioner (Appeals) on the ground that the appellants have failed to produce any evidence that the services provided by them are in the nature of the services covered by the said Circular and the Notification. It is apparent that the records of the appellants were taken away by the Revenue and therefore, they do not have access to all the documents. However a copy of the documents (almost 150 pages) has been enclosed along with the statements made by the appellant before Tribunal. In this background, we are inclined to set aside the impugned order and remand the matter back to the original adjudicating authority to re-examine the matter in light of the documents presented by the appellant, (which were probably available with the original adjudicating authority) and decide the matter fresh in terms of the aforementioned Circular and Notification. The appeal is allowed by way of remand.
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2024 (9) TMI 1598
100% Export Oriented Undertaking - Database Usage Charges - Legal Services - Salary - Reimbursement of Expenditure - Quantification Error - Extended Period of Limitation. Database Usage Charges - main argument of the appellant in this case is that though they have made the provision towards the payment to be made towards the Database Usage charges to the overseas service provider, in view of the prevailing global financial crisis, based on a mutual agreement, the service provider waived the consideration to be paid to them - HELD THAT:- In this case, mere submission by the appellant that Data Usage charges have not been paid, would not be sufficient to take it on the face value. It is to be seen as to whether enough evidence has been produced / adduced or not. The documentary evidence brought in by the appellant, clearly proves beyond doubt that the appellant never paid the Data Usage Charges to the overseas service provider. The Department is in error in taking the Service value of USD 2490000 [Rs.11,17,88,550] towards the Data Usage charges to confirm the Service Taxdemand of Rs.1,15,14,221. Therefore, the demand to this extent set aside on merits, and the appeal is allowed. Demand of Rs.5,65,983 on account of the Legal Services utilized by the appellants - HELD THAT:- The Legal Services have been brought under Service Tax bracket vide Notification No.30/2012 ST dated 20.6.2012 [effective from 1.7.2012], wherein as per Sl No.5 of the Table, the Service Tax in respect of the Services rendered by individual advocate or firm of advocates, the Service Tax is required to be paid by the recipient of service.Thus this service became taxable for the first time with effect from 1.7.2012. Though the Service Tax to be paid on Reverse Charge basis in respect of import of services was already been place with effect from 18.04.2006 in view of Section 66A, the service in question has to be first of all be taxable service per se so as to attract the provisions of Section 66A. In this case since Legal services were not under Service Tax bracket till 1.7.2012, Section 66A provisions cannot be directly applied to demand Service Tax payment. Therefore, the confirmed demand on account of Legal services amounting to Rs.5,65,983, is legally not sustainable and set aside the same. The appeal is allowed to this extent. Demand of Rs.2,14,085 being the Service Tax element towards the outflow of foreign exchange on account of Salary, as has been certified by State Bank of India - HELD THAT:- It is found that this would not call of any Service Tax payment. Hence, the confirmed demand of Rs.2,14,085 is set aside and the appeal allowed to this extent. Reimbursement of Expenditure - appellant claims that the foreign exchange outflow is on account of expenses incurred by the overseas parties and the same has been reimbursed to them - HELD THAT:- Appellant have submitted the Certificate issued by SBI to this effect. They have also enclosed more than 160 documents like the main invoice, the connected expenses details like hotel bills, travel bills etc., to fortify their arguments. It would not be possible for the Tribunal to go through these documents to come to a conclusion as to whether they are in the nature of reimbursement or not. However, this demand of Rs.4,49,629 set aside. Quantification Error - HELD THAT:- As has been seen, non-bifurcation of the demand under the individual heads has resulted in making and confirming the demand for Legal Services and Salaries which did not attract the Service Tax at that point of time. The demand of Rs.4,49,629 in respect of reimbursement is being set aside, on the ground that this was not part of classification mentioned in the Show Cause Notice - In respect of the small confirmed amount of Rs.2784, on the same ground that no specific classification has been brought in, the same is set aside and the appeal is allowed to this extent. Time Limitation - HELD THAT:- The Revenue has not brought in any cogent sustainable evidence to effect that the appellant has suppressed any facts with a wilful intent to evade payment of Service Tax on Reverse Charge basis. Therefore, the confirmed demand for the extended period is set aside on the ground of time bar also. The impugned order is set aside - appeal allowed.
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2024 (9) TMI 1597
Irregular Availment of Composition scheme - short payment of tax due to discharge of tax at the rate prevailing on the date of provision of service and raising of invoice as against the rate prevailing on the date of receipt of the taxable value - short payment of tax by following realization basis as against the accrual basis prescribed under the POT Rules - short-payment of tax based on an improper comparison of select GL Codes - nonmaintenance of separate records with respect to input services user for dutiable and exempt output services - Irregular availment of pro-rata cenvat credit attributable to bad debts written off. Irregular Availment of Composition scheme - HELD THAT:- There is no dispute regarding the eligibility of the appellant to avail the composition scheme. It is observed that there is no specific procedure prescribed Rule 3(3) of the Composition Rule for exercising the option to avail the scheme. In the absence of such formal requirement in wring to avail the scheme, the payment made by the appellant under the scheme is construed as deemed exercise of the option under the Scheme. This issue has been settled by the decision of the Hon ble Calcutta High Court in M/S. LARSEN TOUBRO LIMITED VERSUS ASSISTANT COMMISSIONER, SERVICE TAX COMMISSIONERATE, DIVISION-III, KOLKATA OTHERS [ 2022 (12) TMI 523 - CALCUTTA HIGH COURT ] where it was held that ' no format has been prescribed for making/exercising an option nor has it been specified as to whom the option must be addressed, the fact of the paying service at composition rate in the return filed by the service provider is enough indication to show that they have opted for payment under the works contract composition scheme.' - The appellant has rightly paid service tax under the Works Contract Composition Scheme and hence the demand confirmed under this category is not sustainable. Demand of service tax of Rs.56,172/- confirmed in the impugned order on the allegation that the Appellant should have discharged service tax @4.12% prevalent on the date of receipt of the taxable value as against the rate of 2.06% prevalent at the time of rendering of the service - HELD THAT:- The taxable event in this case is the rendition of service. Hence, service tax is payable at the rate applicable at the time of rendition of the services. It is observed that this view has been held by the Hon ble High Court, Delhi in the case of VISTAR CONSTRUCTION (P) LTD/PIYARE LAL HARI SINGH BUILDERS PVT LTD VERSUS UNION OF INDIA AND ORS [ 2013 (2) TMI 52 - DELHI HIGH COURT ] where it was held that ' the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. The instruction dated 28-4-2006 which is contrary to the law declared by the Supreme Court is clearly invalid.' Demand of Rs.18,95,028/- confirmed in the impugned order based on the difference between gross amount billed vis- -vis gross amount realised as reflected in the returns filed - HELD THAT:- The adjudicating authority has not given any finding to the contrary of the reconciliation report submitted by the appellant. As the department has not produced any other evidence to substantiate short payment of further demand on this count, it is held that only this amount of Rs.18,128/- needs to be confirmed on this count. Accordingly, the demand of service tax of Rs.18,128/- along with interest, confirmed under the category of 'Business Auxiliary Service' and the remaining demand confirmed under this category in the impugned order set aside. Since this amount has already been paid by the appellant from their Cenvat account on 31 May 2013 along with interest, the payment of service tax and interest is appropriated against the demand confirmed in this order. As the demand occurred only due to the reconciliation report submitted by the Chartered Accountant, there is no suppression of fact established in this case. Accordingly, no penalty imposable on the appellant on this demand confirmed. Short-payment of service tax of Rs.3,53,30,714/- based on the comparison of select GL Codes appearing in the Trial Balance of the Appellant vis- -vis the income reflected in the ST 3 returns - HELD THAT:- It is observed that the appellant submitted a detailed reconciliation report duly certified by a Chartered Accountant, along with the reply to the show cause notice. As per this report, there was no differences in the income reflected in the trial balance and the income reflected in the ST 3 returns. However, it is observed that the adjudicating authority has not given any finding on this report in the impugned order - the demand confirmed on this count in the impugned order is not sustainable and accordingly, the same is set aside. Violation of Rule 6 of the CCR on account of non-maintenance of separate records with respect to input services user for dutiable and exempt output services - HELD THAT:- The appellant have maintained Contract-wise/project-wise separate records in its accounting software (SAP). In this method of accounting, each contract/project was shown as a separate profit centre. Therefore, separate records with respect to exempt and taxable outward supply were maintained by the Appellant in compliance with Rule 6 of the Cenvat Credit Rules. Thus, the appellant is not liable to pay an amount equivalent to 5/8% of the value of exempted goods, as demanded in the impugned order - reliance placed on the judgement of the Tribunal in the case of Essar Projects India Limited Vs. CCE [ 2011 (2) TMI 187 - CESTAT, AHMEDABAD] whereby it was held that the provision of Rule 6(3) does not apply if the Cenvat records are maintained project-wise/contract-wise - the demand of reversal of Cenvat credit confirmed in the impugned order on this count is not sustainable. Irregular availment of pro-rata cenvat credit attributable to bad debts written off - HELD THAT:- There is no provision under the Cenvat Credit Rules, 2004 or in the Finance Act, 1994 which requires for reversal of Cenvat credit for the services provided for which no consideration has been received by an assessee - the demand confirmed on this count is not sustainable. Invocation of extended period to demand service tax - Penalty - HELD THAT:- There is no suppression of facts with intention to evade payment of tax established in this case. The appellant has been filing returns regularly disclosing all information to the department. There were multiple audit conducted on the appellant's records. Also, it is observed that the entire demand has been raised based on their profit and loss account and balance sheet. Thus, the demands confirmed in the impugned order by invoking extended period of limitation is not sustainable on the ground of limitation. For the same reason, the penalty imposed on the appellant is not sustainable. Appeal disposed off.
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2024 (9) TMI 1596
Interpretation of N/N. 33/2012-ST for exemption of Service Tax on rent of immovable property - whether rent amount for the entire year is Rs. 6,57,000/- which is much below the threshold limit of Rs. 10,00,000/- per annum the same is exempted under N/N. 33/2012-ST dated 20.06.2012? - HELD THAT:- In the present case the appellant are not output Service provider however, they have paid Service Tax on Reverse Charge basis in respect of certain service such as GTA, security Service, insurance service transportation of goods by road and security/detective agency service. This Service Tax was paid under Section 68 (2) of the Finance Act, 1994 read with Service Tax Rules, 1994 therefore the value of these services cannot be clubbed with the Service of renting of immovable property service. As regard the condition specified under proviso Clause (ii) of the notification the appellant have not availed any Cenvat Credit for providing service of renting of immovable property service. Even though they have taken the credit on the Service Tax paid on Reverse Charge basis that is not attributed to the provisions of service under renting. As per the plain reading of Clause (ii) Cenvat Credit is barred in order to avail to exemption notification only in respect of the output service on which the exemption notification is availed. In the present case there is no service on which the Cenvat Credit was availed in providing the renting of immovable property service therefore the condition mentioned at clause (ii) of the notification is not relevant. Therefore the total amount of rent that is Rs. 6,57,000/- being less than the threshold exemption limit of 10,00,000 / - P. A. is covered under exemption Notification No. 33 / 2012 - ST dated 20. 06. 2012. The demand is not sustainable - The impugned order is set aside - appeal is allowed.
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2024 (9) TMI 1595
Levy of service tax on the commission received from the airlines under the category of air travel agent services - rendering of air travel agent services to the airlines or to the sub-agents/customers? - recovery of amount of service tax collected by the appellant from the sub-agents under section 73A(2) of the Finance Act. Whether the commission received by the appellant from the airlines was inclusive of service tax? - HELD THAT:- The PSA Agreement was signed by the appellant in the year 1994, whereas air travel agent services became taxable w.e.f. 01.07.1997. Thus, the PSA Agreement could not have conceived of any service tax on air travel agent service. This apart, unless an amount has been specifically recovered as tax, the phrases such as full compensation or inclusive of all taxes would not automatically mean that tax has been recovered. Full compensation can only mean that the appellant would not claim any amount over and above the amount of commission paid by the airlines for sale of air ticket and other allied services. The appellant has also produced a certificate issued by airlines stating that no service tax was included in the commission paid by them to the appellant. It is, therefore, not possible to accept the contention of the department that the Agreement included service tax also under the remuneration clause of the Agreement. Whether the appellant rendered air travel agent services to the airlines as contended by the department or the appellant rendered this service to the subagents or customers as contended by the appellant? - HELD THAT:- The commission that was received by the appellant from the airlines was for the services that the appellant was providing to the sub-agents or to the customers and not because the appellant rendered any service to the airlines. In fact, the commission received by the appellant had a direct nexus with the services rendered by the appellant to the sub-agents. It can be seen from the provision of section 67 of the Finance Act that in respect of air travel agent services, the taxable value is the gross amount charged form the customer excluding airfare, but includes the commission received from the airlines. Hence, in addition to the amount charged from the recipient of service (customer), the provision created a specific inclusion to the extent of airline commission. The requirement of the inclusion clause existed only because the airline was not considered as the service recipient of air travel agent services. If air travel agent services were rendered to airlines, then the commission from airlines would have been taxable as gross amount charged from the customer itself. The travel agent services have been rendered by the appellant to the sub-agents, and not to the airlines and once services are provided by the appellant to subagents, the sub-agents cannot be said to be providing any services to the appellant. Whether the department is justified in recovering the amount of service tax collected by the appellant from the sub-agents under section 73A(2) of the Finance Act? - HELD THAT:- Section 73A of the Finance Act has carved out two situations which are distinct from each other. Section 73A(1) applies to cases where a person, who is liable to pay tax, has rendered a taxable service to a service recipient, but has collected service tax in excess, which has not been deposited with the government. This means that section 73A(1) mandates the existence of a service provider and a service recipient relationship and tax has been collected in excess of the applicable levy. On the other hand, section 73A(2) deals with a situation where any person, not being a service provider, has collected an amount from another person representing as service tax. This provision applies only to those cases where there is no service provider and service recipient relationship between the person collecting an amount as service tax and the person paying such amount. It is for this reason that sub-section (2) of section 73A has been invoked by the department. The contention of the appellant is that it rendered services to the sub-agents and not to the member airlines of IATA and so the appellant was entitled to collect service tax from the sub-agents, who were the service recipients. The burden of tax is borne by the service recipient. Once it is established that the sub-agents are the recipient of services rendered by the appellant, there can be no illegality in recovering service tax from the sub-agents. Section 73A(2) of the Finance Act would, therefore, not be applicable. The impugned order dated 30.05.2018 passed by the adjudicating authority deserves to be set aside and is set aside - Appeal allowed.
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2024 (9) TMI 1594
Levy of service tax - activity of transmission of electricity, erection of towers, etc. - N/N. 11/2010-S.T. dated 27.02.2010 read with N/N. 45/2010-S.T. dated 20.07.2010 - HELD THAT:- As the appellant have already paid the entire amount of Service Tax, along with interest, and 25% of the penalty imposed under Section 78 of the Finance Act, 1994, in these circumstances, the proceedings against the appellants are to be closed. Accordingly, the penalties imposed on the appellant under Section 77 of the Finance Act, 1994 and the co-appellant under Section 78(1) of the Finance Act, 1994 are set aside. The appeals are allowed.
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Central Excise
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2024 (9) TMI 1645
Recovery of Central Excise duty with interest and penalty - plastic waste or not - popcorn waste used by the appellant for manufacturing PSF - benefit of NIL rate of duty under Serial No. 172A of the N/N. 17.03.2012 and concessional rate of duty @ 2% under Serial No. 70A of the Notification dated 01.03.2011 - Extended period of limitation under section 11A(4) of the Central Excise Act - suppression of facts or not - Imposition of penalty on Director. HELD THAT:- It is not in dispute that PET bottles scrap constitutes 90 percent of the raw material that is used and the percentage of popcorn waste used in the manufacture of PSF is less than 10 percent. In Tata Iron and Steel [ 1975 (12) TMI 79 - SUPREME COURT] , the Notification of which benefit was claimed granted exemption to duty paid pig iron but duty paid pig iron was also mixed with other non duty paid materials. It is in this context that the Supreme Court held that if the intention of the government was to exclude exemption to duty paid pig iron when mixed with other materials, then the Notification would have used the expression, only or exclusively or entirely in regard to duty paid pig iron but these expressions were not used. Thus, the benefit of the exemption could not have been denied. In the absence of the word only , exclusively , wholly or entirely in the two Notifications, the benefit of the two Notifications could not have been denied to the appellant merely for the reason that apart from using 90 percent PET bottles scrap, the appellant also used approximately 10 percent of popcorn waste in the manufacture PSF. Whether popcorn is plastic waste? - whether denial of nil/concessional duty to PSF manufactured by the appellant on the ground that popcorn in not plastic waste, is justified? - HELD THAT:- The benefit of the Notifications has also been denied to the appellant for the reason that popcorn is recycled PET material and not plastic waste and, therefore, would not fall within the scope of the Notifications. It should not be forgotten that the purpose of the Notifications is to encourage manufacturers to use plastic material and help in recycling of plastic waste. The view taken by the adjudicating authority defeats this very purpose. The adjudicating authority has examined popcorn to see whether it is a plastic waste, classifiable under Customs Tariff Heading 3915 of the Customs Tariff Act, 1975. The Notifications do not provide that only plastic waste or plastic scrap falling under Customs Tariff Heading can be used as inputs in the manufacture of PSF. There is no dispute that popcorn waste used by the appellant is manufactured from waste of plastic, yarn and textile. The adjudicating authority has failed to appreciate that plastic scrap or plastic waste is not restricted to Chapter 39 only, and such an interpretation has the effect of adding words or conditions in the said Notifications. Extended period of limitation - HELD THAT:- The present appeal relates to the period from March 2013 to 02.01.2017. The show cause notice was issued on 21.03.2018. The demand raised for period up to February 2016 amounting to Rs. 53,56,90,049/- out of the total demand of Rs. 66,44,69,751/- would be beyond the normal period of limitation. This demand has, however, been confirmed by invoking the extended period of limitation contemplated under section 11A(4) of the Central Excise Act on the ground that the appellant had procured popcorn in the guise of PET bottle flakes and mis-declared the description of the goods in the invoices with intent to evade payment of duty and avail the benefit of the Notifications, which fact would otherwise have gone unnoticed if the investigation had not been carried out. An audit of the records of the appellant had also been conducted, but objection relating to wrong availment of the benefit under the exemption Notifications was never raised. It had also been stated by the appellant in the reply to the show cause notice that the appellant had never denied using miniscule quantity of popcorn for manufacturing PSF and in this connection, the appellant had referred to the various statements tendered to the department at the time of investigation. It was, therefore, stated in the reply that once all the facts were available with the department, the department cannot allege that the appellant had suppressed any material fact. The impugned order merely mentions that it is not the case of the noticee that they had produced all the relevant records to the audit team . This finding is merely based on a presumption. It is expected that when an audit is carried out, all the relevant documents are examined by the officers who conduct the audit. The adjudicating authority cannot draw an inference that since an objection was not raised by the audit team, the appellant must not have disclosed all the documents to the audit team. The department, at all stages, had an opportunity to question the appellant within the stipulated time but that was not done. Even otherwise, the appellant had in the reply clearly mentioned that from the various statements tendered to the department at the time of investigation, the appellant had never denied that it was using minuscule quantity of popcorn for manufacture of the final product. It must also be remembered that mere suppression of fact is not enough. There has to be a deliberate attempt to evade payment of excise duty. The show cause notice must specifically deal with this aspect and the adjudicating authority is also obliged to examine this aspect in the light of the facts stated by the assessee in reply to the show cause notice. The provisions of section 11A (4) of the Central Excise Act came up for interpretation before the Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT ]. The Supreme Court observed that section 11A(4) empowers the Department to reopen the proceedings if levy has been short levied or not levied with in six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power with in five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty. In EASLAND COMBINES VERSUS COLLECTOR OF C. EX., COIMBATORE [ 2003 (1) TMI 107 - SUPREME COURT ] the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. In the present case, the show cause notice alleged that the appellant had suppressed using popcorn in the manufacture of PSF and this fact was suppressed from the department with the sole intent to evade payment of duty by availing the benefit of the two Notifications - the appellant had filed ER-1 returns and disclosed the necessary facts required to be disclosed. There is, therefore, no suppression by the appellant of material facts from the department, much less with an intent to evade payment of central excise duty. The extended period of limitation contemplated under section 11A(4) of the Central Excise Act, therefore, could not have been invoked in the facts and circumstances of the case. Penalty upon the Director - HELD THAT:- The imposition of penalty upon the Director of the appellant under rule 26(1) of the Central Excise Rules has also been questioned by the learned counsel for the appellant. It has been stated that no evidence has been disclosed by the department to prove that the Director dealt with the goods which were liable to confiscation with knowledge about the liability to confiscation. According to the learned counsel for the appellant, such a finding has not been recorded nor evidence was brought on record by the department. The impugned order dated 16.09.2020 passed by the adjudicating authority deserves to be set aside and is set aside. The two appeals are, accordingly, allowed.
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2024 (9) TMI 1593
100% EOU - Classification of spent solvent as waste or by-product - basic contention of the department was that the spent solvent emerging during the manufacturing process of bulk drugs is a by-product and not a waste and scrap and therefore, the appellant has wrongly availed the benefit of exemption N/N. 23/2003-CE dated 31.03.2003 - HELD THAT:- The matter is no longer res-integra as the issue has already been decided by Hon ble Andhra Pradesh High Court in the case of COMMISSIONER OF C. EX., HYDERABAD-I VERSUS AUROBINDO PHARMA LTD. [ 2010 (10) TMI 175 - ANDHRA PRADESH HIGH COURT] which has also been upheld by the Hon ble Supreme Court in COMMISSIONER VERSUS AUROBINDO PHARMA LTD. [ 2011 (5) TMI 925 - SC ORDER] , where it was held that ' It has been clearly brought out that the spent solvents had already been utilized in the factory and latter it had undergone further purification for reuse. The excess spent solvents were sold to the outsiders, as it had lost its value and therefore, what was sold was not new goods but only spent solvents which had undergone certain purification process. Such purification process of chemicals has been held to be not a process of manufacture.' The impugned order-in-appeal is not sustainable in law and therefore set aside - appeal allowed.
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2024 (9) TMI 1592
CENAVT Credit - refund of of accumulated Cenvat Credit - it is alleged that appellant has not received the inputs and has taken the Cenvat Credit as well as the refund on the basis of fake invoices - extended period of limitation - Penalties on the partner and the Manager. HELD THAT:- On going through the various decisions arising out of the same investigation conducted by the Commissionerate, C.E., Meerut-II, on the basis of which, SCN was issued. Further, it is found that the issuance of SCN is based on assumptions and presumptions and no investigation was made at the end the consigners who have issued the invoices on the basis of which, the appellant had taken the Cenvat Credit. It is also found that the appellant had produced a number of evidences in respect of all 53 consignments such as copies of toll-receipts evidencing crossing of J K border and the report of Excise Taxation Authority, Patiala (Punjab) evidencing the entry of all vehicles carrying consignments at Madhopur Check Post etc., but the same were completely ignored by the Adjudicating Authority to confirm the demand. This issue is no more res integra and the Tribunal has already decided a number of cases arising out of the same investigation and evidence put forth by Meerut-II, Commissionerate and all the appeals have been allowed by the Tribunal in favour of the assessees. Extended period of limitation - HELD THAT:- It is found that substantial demand is barred by limitation because the appellants have not concealed any facts from the department and have been regularly filing ER-2 Returns. The copies of all the returns have also been produced on record. The appellants have also produced a number of documentary evidences to show that they had exercised due diligence in following all the prescribed procedures and also declared all requisite information in their ER-2 Returns. Penalties on the partner and the Manager - HELD THAT:- There is nothing on record to show that they have violated the provisions of Rule 26 of the Central Excise Rules, 2002 because the said rule does not talk about any offending goods, instead it talks about dealing etc with goods which are liable to confiscation; therefore, we hold that penalties under Rule 26 ibid on the partner and manager are incorrect in law. The impugned order is not sustainable in law and is liable to be set aside - Appeal allowed.
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2024 (9) TMI 1591
Classification of corrugated board - whether corrugated board cleared by the respondent independently without corrugated box is classified under Tariff Item 48191090 and accordingly not eligible for exemption Notification No.04/2006-CE dated 01.03.2006 as claimed by the appellant treating the classification under 48191010 as corrugated cartons, boxes and cases? - HELD THAT:- It can be seen that 481910 covers cartons, boxes and cases, of corrugated paper and paperboard, 48191010 covers boxes, 48191090 is other. However even 48191090 mentioned other but on reading entry under 481910 except boxes all other items such as cartons and cases of corrugated paper and paperboard falls under 48191090. When this be so then even though goods of 48191090are clearly covered under the exemption Notification No.04/2006-CE under entry No.96E. Therefore, firstly it is opined that even if classification suggested by the Revenue under 48191090 is accepted then also the goods covered under that sub heading is covered under exemption. Even if the corrugated sheet as in the appellant case cleared without having boxes, the same is appropriately classifiable under 48081000. The rate of duty on the goods under 48081000 as well as under 48191010 read with Notification No.04/2006-CE are same during the relevant period and for this reason the adjudicating authority has rightly dropped the demand raised in the show cause notice. The adjudicating authority is agreed to classify the goods in question i.e. corrugated sheet, platecleared without corrugated boxes under 48081000. There are no infirmity in impugned order. Hence, the impugned order is upheld - Revenue s appeal is dismissed.
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2024 (9) TMI 1590
Classification of goods - Zero Air - whether the Zero Air cleared by the appellant during the period December 2002 to June 2007 is classifiable under Chapter heading 2851 as compressed air attracting NIL rate of duty or classifiable under Chapter heading 2804 attracting 16% duty as confirmed in the impugned order? - HELD THAT:- The process of manufacture of Synthetic Air and Compressed Air are different; however, from the evidences collected by the Department viz. statement of Mr. M. Dhananjay, Manager of M/s. Somu Solvents (P) Ltd. who are engaged in the manufacture of Glycol ether acetates and other solvents. It is stated that they purchased Zero Air from the appellant and categorically stated that the said Zero Air contains 78% of Nitrogen, 20.8% of Oxygen and 1.2% of Argon and they do not use the same as Compressed Air in or in relation testing their manufacture of their finished products, since Compressed Air cannot be used in Gas Chromatograph test; besides, composition of Compressed Air is not of required standard for Gas Chromatograph test. Further it is stated by him that there is no difference between Synthetic Air and Zero Air as both are one and the same. In his statement dated 07.11.2007, Mr. Devendra Kumar, Scientist of M/s. EID Parry (India) Limited, Bangalore has also categorically disclosed that they purchased Zero Air from the appellant and the same is used for Gas Chromatograph test by them, to which Compressed Air cannot be a substitute. It is found that the clearance of Zero Air classifying the same under Chapter Heading 2851 as Compressed Air itself involved suppression of facts. Therefore, invocation of extended period, in our view, is justified. Besides that, from July 2007, accepting the classification as pointed out by the Revenue subsequent to visit of their factory, the appellant discharged duty for clearance of the said Zero Air classifying the same under Chapter Heading 2804. There are no merit in the appeal. consequently, the impugned order is upheld and the appeal is rejected.
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2024 (9) TMI 1589
CENVAT Credit - input service - whether post manufacture and clearance from the factory at Limda, Vadodara and enroute to the premises of the OEM, when the tyres are required to be stored in godowns during transit, whether service tax on godown rent as well as security personnel etc. is an eligible input service? - HELD THAT:- From the terms and conditions of the supply and the observations of the Adjudicating Authority, it is absolutely clear that there is no dispute that the sale of goods gets completed only at the buyer s premises therefore, since the appellant is under obligation to deliver the goods at the customer s premises, the sale gets completed only after delivery of the goods. In this fact, all the expenses till the delivery of the goods deemed to have been included in the sale value of the excisable goods. Therefore, for the purpose of Cenvat credit, since the expenses upto the delivery of goods is includible in the excisable goods and excise duty was paid thereon, such services are eligible input service and credit is admissible, as held by this Tribunal in the case of M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD ] and ULTRATECH CEMENT LTD. VERSUS COMMISSIONER OF C. EX., BHAVNAGAR [ 2007 (3) TMI 738 - CESTAT AHMEDABAD ]. The impugned orders set aside - appeal allowed.
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Indian Laws
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2024 (9) TMI 1588
Seeking a decree for specific performance of an agreement to sell - alternative relief of recovery of earnest money and damages - relief of permanent injunction - cause of action arisen to the plaintiff for filing of present suit or not - suit is bad for non-joinder of necessary parties or not - estoppel by own act and conduct from filing the present suit - HELD THAT:- It is trite law that jurisdiction under Article 136 of the Constitution of India should not be exercised unless the findings on facts recorded by the Courts below suffer from perversity or are based on omission to consider vital evidence available on record. The respondent-plaintiff filed the subject suit with a pertinent assertion that the disputed agreement was executed by the appellant-defendant for sale of his agricultural land admeasuring 30 Kanals and 8 Marlas at the rate of Rs.5,00,000/- per Killa. As per the recital in the agreement, the respondent-plaintiff paid a sum of Rs.16,00,000/- in cash to the appellant-defendant at the time of the execution of the disputed agreement. It is not in dispute that the stamp papers were not purchased by the appellantdefendant and rather Amarjeet Singh was the person who purchased the same. The document was typed out in Gurmukhi language and the photostat copy thereof is available on record. A visual overview of the disputed agreement would show that it runs into three pages. The signature of the respondent-plaintiff, and the thumb impression of the appellant-defendant are marked only on the last page thereof. The first and second pages of the agreement, do not bear the signature of the respondent-plaintiff or the thumb impression of the appellant-defendant. There exist significant blank spaces at the foot of the first two pages below the transcription typed out on these two pages. As per the disputed agreement, the appellant-defendant agreed to sell the suit land to the respondent-plaintiff @ Rs. 5,00,000/- per Killa, which was just about half of the market rate of the land at the relevant point of time, as admitted by the respondent-plaintiff. Going by the rate as fixed in the disputed agreement, the total sale consideration would have amounted to approximately, Rs.18,87,000/-. The disputed agreement recites that the appellant-defendant had received earnest money to the tune of Rs.16,00,000/- for the purpose of doing agriculture and to buy cheaper and better land nearby. Thus, a lion s share of the sale consideration was already paid to the appellant-defendant at the time of the execution of the disputed agreement and the remaining amount was hardly 15% of the total value of the suit land as agreed upon between the parties. Therefore, it does not stand to reason that the respondent-plaintiff being a Police Constable would part with a huge sum of Rs.16,00,000/- towards a transaction to purchase land and thereafter, agree to defer the execution of the sale deed to a date almost 16 months later with the balance amount being a fraction of the total sale consideration. The circumstances, the evidence of the respondent-plaintiff; the disputed agreement and the plaint clearly indicates that the disputed agreement seems to have been prepared on a blank stamp paper on which, the thumb impressions of the illiterate appellantdefendant had been taken prior to its transcription. The large blank spaces on the first and second pages of the disputed agreement and the absence of thumb impression/signatures of the parties and the attesting witnesses on these two pages, fortifies the conclusion that the disputed agreement was transcribed on one of the blank stamp papers on which the thumb impression of the appellant-defendant had been taken beforehand. The respondent-plaintiff admitted that he did not seek permission from his department before entering into the agreement for purchase of property having high value. It is not the case of the respondent-plaintiff that he and the appellantdefendant were on such close terms that he would readily agree to give cash loan to the appellant-defendant without any security. The factors are sufficient for this Court to conclude that the entire case of the respondent-plaintiff regarding the execution of the disputed agreement; the alleged payment of Rs. 16,00,000/- in cash to the appellant-defendant on 7th May, 2007 and the alleged appearance of the respondent-plaintiff in the office of the Sub-Registrar in the purported exercise of getting the sale deed executed in terms of the disputed agreement is nothing but a sheer piece of fraud and concoction - there cannot be any escape from the conclusion that the judgment and decree dated 18th February, 2013 rendered by the trial Court, judgment dated 20th March, 2017 passed by the First Appellate Court and the judgment dated 25th April, 2018 rendered by the High Court suffer from perversity on the face of the record and hence, the same cannot be sustained. Appeal allowed.
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2024 (9) TMI 1587
Auction sale pertaining to the immovable property - valuation of the property of the society (under liquidation) and the upset price were fixed on the lower side - three bidders had not participated in the auction sale - mala fide could be attributed in respect of the questioned auction sale or not - whether auction purchaser was not a private individual but a body established under the statute, i.e., the Agricultural Produce Market Committee, Rahuri? - HELD THAT:- The appellant was seized of the report of a Government approved valuer who valued the property of the society in excess of ₹4 crore in the year 2013. Since prices of immovable properties seldom decline with passage of time, what was expected of the appellant was to seek interference of the High Court as soon as the auction sale notice dated 12th February, 2016 was published. In its letter dated 2nd March, 2016, the appellant did not object to the valuation. The auction sale notice dated 12th February, 2016 was duly published in the newspapers and did bear reflection of the valuation of the property put up for sale with the upset price, yet, the appellant remained in slumber. It has never been the case of the appellant that it had no notice/knowledge of such notice - It is failed to comprehend as to what prevented the appellant, if at all it was aggrieved by the undervaluation of the property as shown in the notice, to take immediate recourse to available legal remedies to stall the process. The explanation that the appellant was busy in obtaining information after the auction sale was conducted for launching an attack on the process of sale could be correct on facts but by that, precious time was lost. Law is well-settled that a writ court does not encourage petitions from indolent, tardy and lethargic litigants; the writ court comes to the aid of a litigant who approaches it with promptitude and before accrual of third-party rights - That possession of the property had not been taken by the appellant or that its name was not entered in the revenue records are of no significance having regard to the discernible conduct of the appellant in allowing things to drift to its detriment. Thus, the matters which have settled for long ought not to be unsettled. The escalation of price, demonstrated by the appellant, is not surprising. The respondent no. 6 did not contest such facts and figures, probably because the High Court was not inclined to interfere and did not call for a sur-rejoinder. But merely because the respondent no.6 is a creature of a statute, that would not clothe it with any immunity and to have a property transferred to it at a throw away price. After all, the appellant s status has also to be borne in mind. It is not a private bank but a Co-operative Bank, which has been brought into existence with specific objects and purposes in mind. The interest of the appellant, when its outstanding dues recoverable from the society runs into crores of rupees, cannot be brushed aside and deserves due consideration in order to keep the appellant survive in the banking sector. Thus, it would only be just and fair to invoke powers conferred by Article 142 of the Constitution of India. Invoking such power and with a view to do complete justice between the parties, the respondent no.6 is directed to pay to the appellant a sum of ₹1,05,98,710/- (without interest) towards full and final settlement of the dues of the appellant from the society - appeal disposed off.
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2024 (9) TMI 1586
Scope of powers of the Appellate Court under Section 37 of Arbitration and Conciliation Act, 1996 - whether the Appellate Court was justified in setting aside the award dated 08.11.2012 which had already been confirmed under Section 34 of the Act? - HELD THAT:- Recently a three-Judge Bench in Konkan Railway Corporation Limited v. Chenab Bridge Project Undertaking [ 2023 (8) TMI 1227 - SUPREME COURT ] referring to MMTC Limited [ 2019 (2) TMI 1085 - SUPREME COURT ] held that the scope of jurisdiction under Section 34 and Section 37 of the Act is not like a normal appellate jurisdiction and the courts should not interfere with the arbitral award lightly in a casual and a cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle the courts to reverse the findings of the arbitral tribunal. The scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred and that the interference is confined only to the extent envisaged under Section 34 of the Act. The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act. It is exercisable only to find out if the court, exercising power under Section 34 of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred. The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal - The arbitral award is not liable to be interfered unless a case for interference as set out in the earlier part of the decision, is made out. It cannot be disturbed only for the reason that instead of the view taken by the arbitral tribunal, the other view which is also a possible view is a better view according to the appellate court. In the case at hand, the arbitral award dated 08.11.2012 is based upon evidence and is reasonable. It has not been found to be against public policy of India or the fundamental policy of Indian law or in conflict with the most basic notions of morality and justice. It is not held to be against any substantive provision of law or the Act. Therefore, the award was rightly upheld by the court exercising the powers under Section 34 of the Act. The Appellate Court, as such, could not have set aside the award without recording any finding that the award suffers from any illegality as contained in Section 34 of the Act or that the court had committed error in upholding the same. Merely for the reason that the view of the Appellate Court is a better view than the one taken by the arbitral tribunal, is no ground to set aside the award. The Appellate Court committed manifest error of law in setting aside the order passed under Section 34 of the Act and consequently the arbitral award dated 08.11.2012 - the impugned judgment and order dated 10.01.2017 passed under Section 37 is hereby set aside and the arbitral award dated 08.11.2012 is restored to be implemented in accordance with law - Appeal allowed.
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2024 (9) TMI 1585
Requirement of GST registration for a bidder in respect of the concerned NIT - Cancellation of bids of petitioner - While, as per the petitioners, such registration is not required and could not be insisted upon, the stand of the Corporation is that such registration is mandatory - HELD THAT:- Law is well settled that in matters of tender, the role of the Court should be restricted and unless the impugned action is palpably unreasonable or vitiated by mala fide, interference is to be avoided as it causes delay which has cascading effect on the public interest. From the documents annexed to the petition, the registered offices of the petitioners appear to be in various locations in the State of West Bengal. It is not understood as to why all the 9 (nine) petitioners could have a particular address in the State of Assam. The address is also apparently wholly vague. This Court has noticed that even the affidavit accompanying the writ petition is not in accordance with law. The deponent claims to be the Director of the petitioner no. 1 and the authorized signatory of the petitioner s Company. However, there is no statement that the deponent has been authorized by the other petitioners. Though certain certificates have been annexed regarding such authorization, in absence of a statement in the affidavit, the same would not be sufficient. It is needles to state that in a writ petition, the affidavit is of paramount importance as there is no further scope of adducing evidence or cross-examination. Apart from the aspect of lacking in merits in the instant writ petition, the conduct of the petitioners in approaching a Court of Equity is not above board. The writ petition stands dismissed.
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